Fordham Corporation produces a single product. Monthly budgeted production is 4,200 units and the standard costs for one unit of its Concourse product are as follows: Direct materials (6 pounds at $0.50 per pound) $ 3 Direct labor (2 hours at $10 per hour) 20 Variable manufacturing overhead (2 hours at $5 per hour) Fixed manufacturing overhead (2 hours at $4 per hour) 10 8 Total 41 During November, 4,000 units of Concourse were produced. The costs associated with November operations were as follows: Material purchased (36,000 pounds at $0.60 per pound) $21,600 Material used in production (28,000 pounds) Direct labor (8,200 hours at $9.75 per hour) 79,950 Variable manufacturing overhead incurred 41,820 Fixed manufacturing overhead incurred 35,000 Required: Calculate material price and quantity variances; labor rate and efficiency variances; variable overhead spending and efficiency variances; fixed overhead budget and volume variances.
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.
Fordham Corporation produces a single product. Monthly budgeted production is 4,200 units and the
|
Direct materials (6 pounds at $0.50 per pound) |
$ 3 |
|
Direct labor (2 hours at $10 per hour) |
20 |
|
Variable manufacturing Fixed manufacturing overhead (2 hours at $4 per hour) |
10 8 |
|
Total |
41 |
During November, 4,000 units of Concourse were produced. The costs associated with November operations were as follows:
|
Material purchased (36,000 pounds at $0.60 per pound) |
$21,600 |
|
Material used in production (28,000 pounds) |
|
|
Direct labor (8,200 hours at $9.75 per hour) |
79,950 |
|
Variable manufacturing overhead incurred |
41,820 |
|
Fixed manufacturing overhead incurred |
35,000 |
Required: Calculate material price and quantity variances; labor rate and efficiency variances; variable overhead spending and efficiency variances; fixed overhead budget and volume variances.
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