Chefs Company developed the following standard costs for its product for 2022: CHEFS COMPANY Standard Cost Card Cost Elements Standard Quantity × Standard Price/Rate = Standard Cost Direct materials 4 pounds $ 10 $40 Direct labor 2 hours 20 40 Variable overhead 2 hours 8 16 Fixed overhead 2 hours 4 8 $104 The company expected to work at the 360,000 direct labor hours level of activity and produce 180,000 units of product for the year 2022. Actual results for December 2022 were as follows: 14,200 units of product were actually produced. Direct labor costs were $552,420 for 27,900 direct labor hours actually worked. Actual direct materials purchased and used at a cost $543,320 for 57,800 pounds. Total actual manufacturing overhead costs were $340,000. Instructions Using a matrix Compute the following variances for Chefs Company for December and indicate whether the variance is favorable or unfavorable. Direct materials price variance. Direct materials quantity variance. Direct labor price variance. Direct labor quantity variance. Overhead controllable variance. Overhead volume variance.
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.
- Chefs Company developed the following
standard costs for its product for 2022:
CHEFS COMPANY
Standard Cost Card
Cost Elements Standard Quantity × Standard Price/Rate = Standard Cost
Direct materials 4 pounds $ 10 $40
Direct labor 2 hours 20 40
Variable
Fixed overhead 2 hours 4 8
$104
The company expected to work at the 360,000 direct labor hours level of activity and produce 180,000 units of product for the year 2022.
Actual results for December 2022 were as follows:
- 14,200 units of product were actually produced.
- Direct labor costs were $552,420 for 27,900 direct labor hours actually worked.
- Actual direct materials purchased and used at a cost $543,320 for 57,800 pounds.
- Total actual
manufacturing overhead costs were $340,000.
Instructions Using a matrix
Compute the following variances for Chefs Company for December and indicate whether the variance is favorable or unfavorable.
- Direct materials price variance.
- Direct materials quantity variance.
- Direct labor price variance.
- Direct labor quantity variance.
- Overhead controllable variance.
- Overhead volume variance.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
