Edina Co. manufactures a product that requires 3.5 machine hours per unit. The variable and fixed overhead rates were computed using expected capacity of 144,000 units (produced evenly throughout the year) and expected variable and fixed overhead costs, respectively, of $2,016,000 and $3,528,000. In October, Edina manufactured 11,800 units using 40,800 machine hours. October variable overhead costs were $171,000; fixed overhead costs were $284,500. What are the standard variable and fixed overhead rates? Compute the variable overhead variances. Compute the fixed overhead variances. Explain the volume variance computed in part (c).
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.
Edina Co. manufactures a product that requires 3.5 machine hours per unit. The variable and fixed
- What are the standard variable and fixed overhead rates?
- Compute the variable overhead variances.
- Compute the fixed overhead variances.
- Explain the volume variance computed in part (c).
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