Garrison Manufacturing has the following standard cost sheet for one of its products: direct materials (5m @ $6) $30 Direct labour (1.5 hours @$ 10) 15 variable overhead ( 1 hour @ $7) 7 Fixed overhead (2 hours @ $3) 6 Standard unit cost $58 *Rate based on expected activity of 12,000 hours. During the most recent year, the following actual results were recorded: production 13,000 units fixed overhead $36,000 Variable overhead $60,000 Direct materials (62,500m purchased) $382,500 direct labour (15,900 hours) $182,580 Required: Compute the following variances: 1. Direct materials price, usage and total direct material variances 2. Direct labour rate, efficiency and total direct labour 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.
Garrison Manufacturing has the following
direct materials (5m @ $6) $30
Direct labour (1.5 hours @$ 10) 15
variable
Fixed overhead (2 hours @ $3) 6
Standard unit cost $58
*Rate based on expected activity of 12,000 hours.
During the most recent year, the following actual results were recorded:
production 13,000 units
fixed overhead $36,000
Variable overhead $60,000
Direct materials (62,500m purchased) $382,500
direct labour (15,900 hours) $182,580
Required:
Compute the following variances:
1. Direct materials price, usage and total direct material variances
2. Direct labour rate, efficiency and total direct labour variances
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