Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The standard costs and actual costs for a recent period are given below for one of the company's product lines (per unit of product): Actual Cost Direct materials: Standard: 2.0 metres at $4.20 per metre Actual: 2.2 metres at $3.95 per metre Direct labour: Standard: 2.2 hours at $3.00 per hour Actual: 1.8 hours at $3.35 per hour Variable manufacturing overhead: Standard: 2.2 hours at $1.50 per hour Actual: 1.8 hours at $1.85 per hour Fixed manufacturing overhead: Standard: 2.2 hours at $3.60 per hour Actual: 1.8 hours at $3.65 per hour Total cost per unit Actual costs: 9,500 units at $24.62 Standard costs: 9,500 units at $26.22 Difference in cost-favourable Standard Cost $ S 8.40 S 6.60 3.30 7.92 26.22 S 233,890 249,090 15,200 $ 8.69 6.03 3.33 6.57 $ 24.62
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.
HD.6.
During this period, the company produced 9,500 units of product. A comparison of standard and actual costs for the period on a total cost basis is also given above.
There was no inventory of materials on hand to start the period. During the period, 20,900 metres of materials was purchased and used in production. The denominator level of activity for the period was 17,540 hours.
Required:
1. For direct materials:
a. Compute the price and quantity variances for the period. (Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
b. Prepare journal entries to record all activity relating to direct materials for the period.
2. For direct labour:
a. Compute the rate and efficiency variances. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
b. Prepare a
3. Compute the variable manufacturing
4. Compute the fixed overhead budget and volume variances. (Indicate the effect of variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
5. On seeing the $15,200 total cost variance, the company’s president stated, “It’s obvious that our costs are well under control.” Do you agree?
multiple choice
Yes
No
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