aig Company uses two different types of labor to manufacture its product. The types of labor, Cutting and Setup, have the following standards: Labor Type Standard Mix Standard Unit Price Standard Cost Cutting 300 hours $12.00 per unit $2,400 Setup 700 hours 10.00 per unit 6,400 Yield 4,000 units During September, the following actual production information was provided: Labor Type Actual Mix Cutting 7,000 hours Setup 5,000 hours Yield 42,000 units Required: Calculate the labor mix and yield variances.
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.
| Labor Type |
Standard Mix |
Standard Unit Price |
|
| Cutting |
300 hours |
$12.00 per unit |
$2,400 |
| Setup |
700 hours |
10.00 per unit |
6,400 |
| Yield 4,000 units |
During September, the following actual production information was provided:
| Labor Type |
Actual Mix |
| Cutting |
7,000 hours |
| Setup |
5,000 hours |
| Yield 42,000 units |
Required:
Calculate the labor mix and yield variances.
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