During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows Total direct labor cost 100,000 @10 per hour Cost of Material used 70,000 The standards for one units of company product are as follows Direct Labor Direct Material - 3 hours required for one unit - 2 pounds of Material-required for one unit - Rate 24 per hour - Price 20 per pound Required: Compute the following Material variance Material quantity variance Material price 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.
During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows
Total direct labor cost 100,000 @10 per hour
Cost of Material used 70,000
The standards for one units of company product are as follows
Direct Labor Direct Material
- 3 hours required for one unit - 2 pounds of Material-required for one unit
- Rate 24 per hour - Price 20 per pound
Required:
- Compute the following
- Material variance
- Material quantity variance
- Material price variance
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