HB Corporation in Delaware, U.S., makes and sells a single product. The company operates a standard costing system and a ju
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.
HB Corporation in Delaware, U.S., makes and sells a single product. The company operates a
Budget data
Standard production costs per unit (currency in U.S. dollar, $):
Direct material 8kg @$10.80 per kg 86.40
Direct labor 1.25 hours @$18.00 per hour 22.50
Variable
1.25 hours @$6.00 per direct labor hour 7.50
Standard selling price: $180 per unit
Budgeted fixed production overheads: $170 000
Budgeted production and sales: 10 000 units
Actual data
Direct material: 74 000kg @$11.20 per kg
Direct labor: 10,800 hours @$19.00 per hour
Variable overheads: $70,000
Actual selling price: $184 per unit
Actual fixed production overheads: $168 000
Actual production and sales: 9000 units
Requirements
1. Prepare a statement using marginal costing principles that reconciles the budgeted profit and the actual profit. Your statement should show the variances in as much detail as possible.
2. Explain why the variances used to reconcile profit in a standard costing system are different from those used in a standard absorption costing system.
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