Dexter Company, which produces a single product, has the following standard cost and actual cost information: Standard cost: Direct materials ( 8 pounds @ $2.5/lb) $20 Direct labor (3 direct labor hours @$12/hour) 36 Manufacturing OH (3 DLH @ $10/DLH) 30 Total $86 Dexter Company assigns overhead (OH) cost based on direct labor hours (DLH). The $10/DLH pre-determined overhead rate is determined as follows: $7/DLH variable OH and $3/DLH fixed OH ($2,160/720DLH). 720 DLH reflects the capacity hours of producing 240 units (240 units X 3DLH/unit). Please note that it takes three direct labor hours to produce each unit of product. During the period, 230 units were produced at the following cost: Direct materials ( 1900 pounds @ $2.6/lb) $4,940 Direct labor (700 hours @$11.60/hour) 8,120 Manufacturing OH ($4,300 variable OH and $2,000 fixed OH) 6,300 Total $19,360 (Please note that you’ll be asked to compute several variances in this exam based on the same information above) Compute the material quantity variance (please a negative sign if the variance is 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.
Dexter Company, which produces a single product, has the following standard cost and actual cost information:
Standard cost:
| Direct materials ( 8 pounds @ $2.5/lb) | $20 |
| Direct labor (3 direct labor hours @$12/hour) | 36 |
| Manufacturing OH (3 DLH @ $10/DLH) | 30 |
| Total | $86 |
Dexter Company assigns
During the period, 230 units were produced at the following cost:
| Direct materials ( 1900 pounds @ $2.6/lb) | $4,940 |
| Direct labor (700 hours @$11.60/hour) | 8,120 |
| Manufacturing OH ($4,300 variable OH and $2,000 fixed OH) | 6,300 |
| Total | $19,360 |
(Please note that you’ll be asked to compute several variances in this exam based on the same information above)
Compute the material quantity variance (please a negative sign if the variance is unfavorable)
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