Exhibit 10-2 Actual Material Cost Projected Materlal Cost Standard Material Cost Direct-Material Price and Actual Actual Actual Standard Standard Standard Quantity Variances Quantity Price Quantity Price Quantity Price $1.42 $1.40 10,000* $1.40 10,250 pounds used 10,250 DC desserts pounds allowed per pounds per per pound used pound pound $14,555 $14,350 $14,000 $205 Unfavorable $350 Unfavorable Direct-material Direct-material price variance quantity variance $555 Unfavorable Direct-material variance *Actual output x Standard quantity per unit = 2,000 units × 5 pounds per unit = 10,000 pounds allowed. Exhlblt 10-3 Actual Materlal Cost Of Purchases Projected Materlal Cost Of Purchases Direct-Material Purchase Price Variarce Actual Actual Actual Standard Quantity Price Quantity Price DC desserts 12,500 $1.42 12,500 $1.40 pouncs per pounds per purchased pound purchased pound $17,750 $17.500 $250 Untavorable Direcl-maleiial purchiase price varlance Exhibit 10-4 Actual Labor Cost ProJected Labor Cost Standard Labor Cost Direct-Labor Rate and Efficiency Variances Actual Actual Actual Standard Standard Standard Hours Rate Hours Rate Hours Rate 980 $21 980 $20 1,000* $20 DC desserts hours X per hours per hours per Ised hour Used hour allowed hour $20,580 $19,600 $20.000 $980 Urfavoralble $400 Favorable Direct-labor Direct-labor rcle varlance efficiency variance $580 Unfavorable Direct-labor varlance *Actual output X Standard hours per unit = 2,000 units X .5 hcur per unit = 1,000 hours allowed.
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, Danby Company’s material purchases amounted to 6,000 pounds at a price of $7.30 per pound. Actual costs incurred in the production of 2,000 units were as follows:
Direct labor: $116,745 ($18.10 per hour)
Direct material: $30,660 ($7.30 per pound)
The standards for one unit of Danby Company’s product are as follows:
Direct labor: Direct material:
Quantity, 3 hours per unit Quantity, 2 pounds per unit
Rate, $18 per hour Price, $7 per pound
Refer to the data given above. Draw diagrams depicting the direct-material and direct-labor variances similar to the diagrams in Exhibits 10–2, 10–3, and 10–4.
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