aterial is 60 KG iron, natural loss of iron 6%, damaged Pieces 2%, the standard price is $ 16/KG. While the actual units used are 29,120 KG, each KG $ 12. The standard direct labor time is 16 hours, and the standard number of workers is 40. Standard damaged rate is 10%, standard production stops 10%, standard work break is 6 hours, standard direct labor wage is 6 plus 2 as a bonus. While in fact, the direct labor hour is 62,650, the actual wage is the same as the standard price but without the bonus.
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.
Assume that Iron company producing 700 laptops during 2018. Standard and actual costs are as follows::
The standard quantity of direct material is 60 KG iron, natural loss of iron 6%, damaged Pieces 2%, the standard price is $ 16/KG. While the actual units used are 29,120 KG, each KG $ 12.
The standard direct labor time is 16 hours, and the standard number of workers is 40. Standard damaged rate is 10%, standard production stops 10%, standard work break is 6 hours, standard direct labor wage is 6 plus 2 as a bonus. While in fact, the direct labor hour is 62,650, the actual wage is the same as the standard price but without the bonus.
The application standard rate is direct material quantity. And the application standard rate is $ 8/ KG. While in actuality, the total overhead cost is $86,000.
Requirements;
1- Calculate the standard and actual costs
2- Analyze the deviation for each element and provide a comment in the result of deviation.
Step by step
Solved in 2 steps
