DEF Company, which applies overhead on the basis of direct labor hours. Two direct labor hours are required for each product unit. Planned production for the period was set at 9,000 units. Manufacturing overhead is budgeted at P135,000 for the period, of which 20% of this cost is fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was P108,500 and fixed manufacturing overhead cost was P28,000. DEF Company uses a four variance method for analyzing manufacturing overhead. The variable overhead spending variance for the period is A. P5,300 unfavorable C. P6,300 unfavorable B. P1,200 unfavorable D. P6,500 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.
DEF Company, which applies
hours. Two direct labor hours are required for each product unit. Planned production for the period was
set at 9,000 units. Manufacturing overhead is budgeted at P135,000 for the period, of which 20% of this
cost is fixed. The 17,200 hours worked during the period resulted in production of 8,500 units. Variable
DEF Company uses a four variance method for analyzing manufacturing overhead.
The variable overhead spending variance for the period is
A. P5,300 unfavorable C. P6,300 unfavorable
B. P1,200 unfavorable D. P6,500 unfavorable
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