Direct materials (3.0 Ibs. @ $5.00 per Ib.) $ 15.00 Direct labor (1.8 hrs. @ $12.00 per hr.) 21.60 Overhead (1.8 hrs. @ $18.50 per hr.) 33.30 Total standard cost $ 69.90 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 90,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs $ 150,000 Fixed overhead costs Depreciation—Building 23,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervision 239,500 Total fixed overhead costs 349,500 Total overhead costs $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,000 Ibs. @ $5.20 per lb.) $ 239,200 Direct labor (19,000 hrs. @ $12.30 per hr.) 233,700 Overhead costs Indirect materials $ 41,600 Indirect labor 176,500 Power 17,250 Repairs and maintenance 34,500 Depreciation—Building 23,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervision 239,500 642,150 Total costs $ 1,115,050 rev: 04_27_2020_QC_CS-209738 3. Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No 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.
Please my answer and explain incorrect.
Antuan Company set the following standard costs for one unit of its product.
| Direct materials (3.0 Ibs. @ $5.00 per Ib.) | $ | 15.00 |
| Direct labor (1.8 hrs. @ $12.00 per hr.) | 21.60 | |
| Overhead (1.8 hrs. @ $18.50 per hr.) | 33.30 | |
| Total |
$ | 69.90 |
The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level.
| Overhead Budget (75% Capacity) | |||||
| Variable overhead costs | |||||
| Indirect materials | $ | 15,000 | |||
| Indirect labor | 90,000 | ||||
| Power |
15,000 |
||||
| Repairs and maintenance | 30,000 | ||||
| Total variable overhead costs | $ | 150,000 | |||
| Fixed overhead costs | |||||
| 23,000 | |||||
| Depreciation—Machinery | 70,000 | ||||
| Taxes and insurance | 17,000 | ||||
| Supervision | 239,500 | ||||
| Total fixed overhead costs | 349,500 | ||||
| Total overhead costs | $ | 499,500 | |||
The company incurred the following actual costs when it operated at 75% of capacity in October.
| Direct materials (46,000 Ibs. @ $5.20 per lb.) | $ | 239,200 | |||
| Direct labor (19,000 hrs. @ $12.30 per hr.) | 233,700 | ||||
| Overhead costs | |||||
| Indirect materials | $ | 41,600 | |||
| Indirect labor | 176,500 | ||||
| Power | 17,250 | ||||
| Repairs and maintenance | 34,500 | ||||
| Depreciation—Building | 23,000 | ||||
| Depreciation—Machinery | 94,500 | ||||
| Taxes and insurance | 15,300 | ||||
| Supervision | 239,500 | 642,150 | |||
| Total costs | $ | 1,115,050 | |||
rev: 04_27_2020_QC_CS-209738
3. Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.)
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