ABC Company manufactures purple widgets. The company has established a total standard cost for direct material and direct labor of $244.33 per widget. The total standard cost includes 21.5 pounds of direct materials at a standard cost of $10.50 per pound and 3.45 hours of direct labor at a wage rate of $8.50 per hour. The following data pertain to April: The company purchased 500,000 pounds of material, 90% of the material purchased was used for direct materials. The total cost of the direct materials was $4,050,000. The total amount paid for direct labor was $600,750. The actual direct labor hours worked was 67,500 hours. The company actually produced 20,000 widgets for the month of April 1. Calculate the Total Direct Materials Variance 2. Calculate the Total Direct Labor Variance 3. Explain who is in the best position in the organization to influence each of these variances. a. Direct Materials Price Variance b. Direct Materials Quantity Variance c. Direct Labor Rate Variance d. Direct Labor Time Variance
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.
ABC Company manufactures purple widgets. The company has established a total
- The company purchased 500,000 pounds of material, 90% of the material purchased was used for direct materials.
- The total cost of the direct materials was $4,050,000.
- The total amount paid for direct labor was $600,750.
- The actual direct labor hours worked was 67,500 hours.
- The company actually produced 20,000 widgets for the month of April
1. Calculate the Total Direct Materials Variance
2. Calculate the Total Direct Labor Variance
3. Explain who is in the best position in the organization to influence each of these variances.
a. Direct Materials Price Variance
b. Direct Materials Quantity Variance
c. Direct Labor Rate Variance
d. Direct Labor Time Variance
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