Catch a Wave Company manufactures surfboards. Its standard cost information follows: Standard Standard Price Standard Unit Quantity (Rate) Cost Fiberglass 15 sq. ft. $5 per sq. ft. $75.00 Direct labor 10 hrs $15 per hour 150.00 Variable manufacturing overhead $6 per direct labor hour 60.00 Fixed manufacturing overhead $8 per direct labor hour 80.00 The company expected to require 2,500 hours of direct labor. Catch a Wave has the following actual results for the month of June: Number of units produced and sold 260 Number of square feet of fiberglass used 4,100 Cost of fiberglass purchased (5,000 square feet) $24,500 Number of labor hours worked 2,550 Direct labor cost $39,525 Variable overhead cost $14,790 Fixed overhead cost $20,500 1. Compute the eight 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.
Catch a Wave Company manufactures surfboards. Its
Standard Standard Price Standard Unit
Quantity (Rate) Cost
Fiberglass 15 sq. ft. $5 per sq. ft. $75.00
Direct labor 10 hrs $15 per hour 150.00
Variable manufacturing
Fixed manufacturing overhead $8 per direct labor hour 80.00
The company expected to require 2,500 hours of direct labor.
Catch a Wave has the following actual results for the month of June:
Number of units produced and sold 260
Number of square feet of fiberglass used 4,100
Cost of fiberglass purchased (5,000 square feet) $24,500
Number of labor hours worked 2,550
Direct labor cost $39,525
Variable overhead cost $14,790
Fixed overhead cost $20,500
1. Compute the eight variances
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