Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are: Material (5 kilograms × $5.00 per kilogram) $ 25.00 Labor (6 hours × $19.50 per hour) 117.00 All materials are added at the beginning of processing. The following data were taken from the company’s records for November: In-process beginning inventory None In-process ending inventory 800 units, 70% complete as to direct labor Units completed 6,400 units Budgeted output 6,800 units Purchases of materials 58,000 kilograms Total actual direct labor costs $ 750,000 Actual direct labor hours 41,000 hours Materials usage variance $ 2,300 Unfavorable Total materials variance $ 850 Unfavorable Required: 1. Compute for November: a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)? b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)? c. The actual number of kilograms of material used in the production process during the month. d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase. e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account. f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month. 2. Prepare journal entries to record all transactions, including the variances in requirement 1. How do you get the answer?
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.
Dash Company adopted a
| Material | (5 kilograms × $5.00 per kilogram) | $ | 25.00 | |
| Labor | (6 hours × $19.50 per hour) | 117.00 | ||
All materials are added at the beginning of processing. The following data were taken from the company’s records for November:
| In-process beginning inventory | None | ||
| In-process ending inventory | 800 | units, 70% complete as to direct labor | |
| Units completed | 6,400 | units | |
| Budgeted output | 6,800 | units | |
| Purchases of materials | 58,000 | kilograms | |
| Total actual direct labor costs | $ | 750,000 | |
| Actual direct labor hours | 41,000 | hours | |
| Materials usage variance | $ | 2,300 | Unfavorable |
| Total materials variance | $ | 850 | Unfavorable |
Required:
1. Compute for November:
a. The direct labor efficiency variance. Is this variance favorable (F) or unfavorable (U)?
b. The direct labor rate variance. Is this variance favorable (F) or unfavorable (U)?
c. The actual number of kilograms of material used in the production process during the month.
d. The actual price paid per kilogram of material during the month, the company calculates the direct materials price variance at point of purchase.
e. The amount of direct materials cost and direct labor cost transferred to the Finished Goods Inventory account.
f. The total amount of direct materials cost and direct labor cost in the Work-in-Process Inventory account at the end of the month.
2. Prepare
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