Actual Direct material price $3 per lb. $2 per lb. Direct materials quantity 2 lbs. 4 lbs. Direct labor price $5 $7 Direct labor quantity 3 hours 2 hours Factory overhead cost $2 per machine hou
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.
This section has a nine-part comprehensive problem with multiple questions to address. Download the Chapter 9 Comprehensive Problem Template below to complete all parts. You will need your Bergevin and MacQueen book for reference.
Redlands Inc. reported standard and actual costs for the product that it manufactures:
| Item | Standard | Actual |
| Direct material price | $3 per lb. | $2 per lb. |
| Direct materials quantity | 2 lbs. | 4 lbs. |
| Direct labor price | $5 | $7 |
| Direct labor quantity | 3 hours | 2 hours |
| $2 per machine hour | ---- | |
| Machine hours per unit | 2 machine hours | 3 machine hours |
| Number of finished products made | 10 | 12 |
| Number of finished products sold | 10 | 11 |
| Sales per unit | $40 | $40 |
* Redlands used machine hours to apply factory overhead costs. The company incurred $90 actual total factory overhead costs to make the 12 products.
1.
| Item | Price | Quantity | Total |
| Direct materials | |||
| Direct labor | |||
| Factory overhead | |||
| Standard Cost |
2.
| Income Statement: | |
| Sales revenue | |
| Cost of goods sold | |
| Gross profit |
3. Direct Materials Variances
| Actual Price * Actual Quantity | Standard Price * Actual Quantity | Standard Price * Standard Quantity | ||
| Direct materials quantity variance: | ||
| Direct materials price variance: | ||
| Direct materials total variance: |
4. Direct Labor Variances
| Actual Price * Actual Quantity | Standard Price * Actual Quantity | Standard Price * Standard Quantity | ||
| Direct labor quantity variance: | ||
| Direct labor price variance: | ||
| Total direct labor variance: |
5. Factory Overhead Variances
| Actual Price * Actual Quantity | Standard Price * Actual Quantity | Standard Price * Standard Quantity | ||
| Factory overhead quantity variance: | ||
| Factory overhead price variance: | ||
| Total factory overhead variance: |
6. Cost of Goods Manufactured
| Direct materials | |
| Direct labor | |
| Factory overhead | |
| Cost of goods manufactured |
7. Cost of Goods Sold
| Beginning inventory | |
| Cost of goods manufactured (per COGM statement) | |
| Goods available for sale | |
| Ending inventory | |
| Cost of goods sold |
8. Income Statement
| Sales revenue | |
| Cost of goods sold (per COGS statement) | |
| Gross profit |
9. Balance Sheet
| Current assets: | |
| Finished goods inventory |
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