Harlow Parts produces a single product at its Superior Plant. The master budget for July follows: Harlow Parts Superior Plant Master Budget (For July) Quantity 8,000 Revenue $ 1,520,000 Variable manufacturing cost 576,000 Variable Selling, General and Administrative cost 96,000 Contribution margin $ 848,000 Fixed manufacturing cost 192,000 Fixed Selling, General and Administrative cost 350,000 Operating profit $ 306,000 The following operating income statement shows the actual results for July: Harlow Parts Superior Plant Operating Results (For July) Quantity (units) 9,400 Revenue $ 1,710,800 Variable manufacturing cost 700,394 Variable Selling, General and Administrative cost 109,040 Contribution margin $ 901,366 Fixed manufacturing cost 203,040 Fixed Selling, General and Administrative cost 360,000 Operating profit $ 338,326 Variable overhead is applied on the basis of machine-hours. The standard cost sheet follows: Standard production costs Direct materials 5.00 kilo grams @ $ 6.00 $ 30.00 Direct labor 0.50 direct labor-hours @ 30.00 15.00 Variable overhead 0.75 machine-hours @ 36.00 27.00 Fixed overhead 0.50 direct labor-hours @ 48.00 24.00 Total unit cost $ 96.00 The actual resource usage for July per unit of output follows: Actual production costs Direct materials 5.25 kilo grams @ $ 5.80 $ 30.45 Direct labor 0.48 direct labor-hours @ 32.00 15.36 Variable overhead 0.70 machine-hours @ 41.00 28.70 Fixed overhead 0.48 direct labor-hours @ 45.00 21.60 Total unit cost $ 96.11 Required: Prepare a manufacturing cost variance analysis for the Superior Plant for July.
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.
Harlow Parts produces a single product at its Superior Plant. The
| Harlow Parts | |
| Superior Plant | |
| Master Budget | |
| (For July) | |
| Quantity | 8,000 |
|---|---|
| Revenue | $ 1,520,000 |
| Variable |
576,000 |
| Variable Selling, General and Administrative cost | 96,000 |
| Contribution margin | $ 848,000 |
| Fixed manufacturing cost | 192,000 |
| Fixed Selling, General and Administrative cost | 350,000 |
| Operating profit | $ 306,000 |
The following operating income statement shows the actual results for July:
| Harlow Parts | |
| Superior Plant | |
| Operating Results | |
| (For July) | |
| Quantity (units) | 9,400 |
|---|---|
| Revenue | $ 1,710,800 |
| Variable manufacturing cost | 700,394 |
| Variable Selling, General and Administrative cost | 109,040 |
| Contribution margin | $ 901,366 |
| Fixed manufacturing cost | 203,040 |
| Fixed Selling, General and Administrative cost | 360,000 |
| Operating profit | $ 338,326 |
Variable
| Standard production costs | ||||
| Direct materials | 5.00 | kilo grams | @ $ 6.00 | $ 30.00 |
|---|---|---|---|---|
| Direct labor | 0.50 | direct labor-hours | @ 30.00 | 15.00 |
| Variable overhead | 0.75 | machine-hours | @ 36.00 | 27.00 |
| Fixed overhead | 0.50 | direct labor-hours | @ 48.00 | 24.00 |
| Total unit cost | $ 96.00 |
The actual resource usage for July per unit of output follows:
| Actual production costs | ||||
| Direct materials | 5.25 | kilo grams | @ $ 5.80 | $ 30.45 |
|---|---|---|---|---|
| Direct labor | 0.48 | direct labor-hours | @ 32.00 | 15.36 |
| Variable overhead | 0.70 | machine-hours | @ 41.00 | 28.70 |
| Fixed overhead | 0.48 | direct labor-hours | @ 45.00 | 21.60 |
| Total unit cost | $ 96.11 |
Required:
Prepare a manufacturing cost
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