2.) Babylon Furniture manufactures sofa sets and seats. The company uses a standard cost accounting system. In June 2022, 15,700 seats were made. The following standard and actual cost data applied to the month of June when the normal capacity was 20,000 direct labor hours. All materials purchased were used in production. Cost Element Direct materials Direct labor Overhead Standard (per unit) 5 meters at $6.90 per meter 1.0 hours at $11.40 per hour 1.0 hours at $9.30 per hour (fixed $6.30; variable $3.00) Actual 5,2 meters at $7 per meter 1.2 hours at $11 per hour $120,000 fixed overhead $45,000 variable overhead Overhead is applied on the basis of direct labor hours. At normal capacity, budgeted fixed overhead costs were $126,000, and budgeted variable overhead costs were $60,000. a.) Compute total, price and quantity variances for direct materials. b.) Compute total, rate and efficiency variances for direct labor. c.) Compute total, controllable and volume variances for manufacturing overhead.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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