Part 1

As EEC's corporate business financial analyst, you will need to have a clear understanding of the different types of costs (variable, fixed, and mixed) that the company carries. Complete the following for this assignment:

• Review EEC's journal activity.
• Define and identify its variable, fixed, and mixed costs.
• Determine what affect a sales volume increase or decrease will have on unit fixed cost, unit variable cost, total fixed cost, and total variable cost.

Part 2

As an EEC corporate business financial analyst, you must have an expert understanding of the various costing methods. Select 1 of the following costing concepts:

• Full costing or absorption costing
• Variable costing
• Target costing
• Life cycle costing
• Activity-based costing

Respond to the following questions on the costing concept that you selected:

• Provide the definition of the concept.
• Discuss how and when the concept could be used by EEC.
• Discuss the advantages and disadvantages of the concept as it relates to EEC.

*********************************THE EEC's journal activity IS ATTACHED FOR USE ON PART 1**************************

Eddison Electronic Company Journal Entries 2005 "000" Omitted Activity 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Sales not on account Sales on account Selling Expense Administrative Expense Supplies Factory Insurance Factory Indirect Labor Factory Salaries Factory Property Tax Maintenance Expense Factory Depreciation Expense Factory Utilities Factory Purchases of Raw Materials Direct Labor Factory Raw Material Inventory, January 1 Raw Material Inventory, December 31 Work in Process Inventory, January 1 19 Work in Process Inventory, December 31 Finished Goods Inventory, January 1 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Finished Goods Inventory, December 31 Bad Debt Expense Accounts Receivable, net Prepaid Expenses Land Plant and Equipment Cash 1/1/05 Accounts Payable Interest Expense Notes Payable, 10% Bonds Payable 8% Stockholders' Equity Retained Earnings Income tax rate 18 $29,440 28,060 3,220 6,210 3,450 920 6,900 288 173 2,001 3,726 828 17,250 3,450 2,070 1,380 4,140 2,300 5,980 4,830 276 9,430 840 2,760 37,950 4,646 14,410 28 2,070 8,510 31,510 6,670 30% Eddison Electronics Company 1.5GB Chip Project - USA Plan Investment in Equipment Actual 2005 Difference $5,000,000 $5,000,000 $0 $5,250,000 2,500,000 $2,750,000 $6,000,000 2,800,000 $3,200,000 $750,000 $300,000 $450,000 900,000 500,000 $1,350,000 950,000 500,000 $1,750,000 $50,000 $0 $400,000 $5,250,000 2,500,000 2,750,000 900,000 $1,850,000 $6,000,000 2,800,000 3,200,000 950,000 $2,250,000 $750,000 300,000 450,000 $50,000 $400,000 Income Sales Variable Expenses Contribution Margin Less Fixed Expenses: Costs Depreciation Net Operating Income Cash Flow Sales Less Variable Expenses Contribution Margin Less Costs Net Annual Cash Inflow