Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: Standard Hours or Quantity Standard Price or Rate Direct materials 3.0 pounds £0.75 per pound Direct labour 0.4 hours £12.00 per hour Variable manufacturing overhead 0.4 hours £9.00 per hour During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of direct labour hours. The following events occurred during March: 8,600 pounds of sand were purchased at a cost of £7,310. 7,200 pounds of sand were used for core tests. 840 actual direct labour hours were worked at a cost of £8,610. Actual variable manufacturing overhead incurred was £3,200. The variable manufacturing overhead efficiency variance for March is: Multiple Choice £320 unfavourable. £360 favourable. £320 favourable. £360 unfavourable.
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.
Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed:
| Standard Hours or Quantity | Standard Price or Rate | |
| Direct materials | 3.0 pounds | £0.75 per pound |
| Direct labour | 0.4 hours | £12.00 per hour |
| Variable manufacturing |
0.4 hours | £9.00 per hour |
During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of direct labour hours. The following events occurred during March:
8,600 pounds of sand were purchased at a cost of £7,310.
7,200 pounds of sand were used for core tests.
840 actual direct labour hours were worked at a cost of £8,610.
Actual variable manufacturing overhead incurred was £3,200.
The variable manufacturing overhead efficiency variance for March is:
-
£320 unfavourable.
-
£360 favourable.
-
£320 favourable.
-
£360 unfavourable.
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