Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labour standards for one unit of Zoom are given below: Standard quantity or hours Standard price or rate Standard cost Direct materials 3.0 kilos £ 3.00 per kilo £ 9.00 Direct labour 0.3 hours £ 7.00 per hour £ 2.10 During the most recent month, the following activity was recorded: 1. 8,800 kilos of material were purchased at a cost of £2.92 per kilo. 2. Huron Company produced 2,000 units of Zoom, using 6,800 kilos of material in the production process. (The rest of the material purchased remained in inventories.) 3. A total of 4,200 hours of direct labour time was recorded at a total labour cost of £34,440. Requirement 1: Compute the direct materials price variance for the month. (Do not round intermediate calculations.) Requirement 2: Compute the direct materials quantity variance for the month.
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.
| Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labour standards for one unit of Zoom are given below: |
| Standard quantity or hours | Standard price or rate | |||||||
| Direct materials | 3.0 | kilos | £ | 3.00 | per kilo | £ | 9.00 | |
| Direct labour | 0.3 | hours | £ | 7.00 | per hour | £ | 2.10 | |
| During the most recent month, the following activity was recorded: | |
| 1. | 8,800 kilos of material were purchased at a cost of £2.92 per kilo. |
| 2. | Huron Company produced 2,000 units of Zoom, using 6,800 kilos of material in the production process. (The rest of the material purchased remained in inventories.) |
| 3. | A total of 4,200 hours of direct labour time was recorded at a total labour cost of £34,440. |
| Requirement 1: | |
| Compute the direct materials price variance for the month. (Do not round intermediate calculations.) | |
| Requirement 2: | |
| Compute the direct materials quantity variance for the month. | |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
