Cheerios is a brand of cereal manufactured by General Mills in the United States, consisting of pulverized oats. General Mills' management has established the following standards: Direct materials: 2.5 ounces at $20 per ounce Direct labor: 1.4 hours at $12.50 per hour Variable manufacturing overhead: 1.4 hours at 3.50 per hour Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October: • 3,750 units of compound were produced during the month. •There was no beginning direct materials inventory. •Direct materials purchased: 12,000 ounces for $225,000. • The ending direct materials inventory was 2,000 ounces. •Direct labor-hours worked: 5,600 hours at a cost of $67,200. •Variable manufacturing overhead costs incurred amounted to $18,200. •Variable manufacturing overhead applied to products: $18,375. The variable overhead rate variance for October is: Variable Manufacturing Overhead rate variance = (AR – SR) * AH AR = actual variable manufacturing overhead rate SR= standard variable manufacturing overhead rate AH = actual hours worked Variable Manufacturing Overhead Efficiency Variance = (AH - SH) * SR AH = actual hours worked SH = standard hours for the actual level of production SR = standard variable manufacturing overhead rate A) $1,900 Unfavorable B) $1,400 Favorable C) $3,750 Favorable D) $4,375 Unfavorable
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.
Cheerios is a brand of cereal manufactured by General Mills in the United States, consisting of pulverized oats. General Mills' management has established the following standards:
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