Like Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. Standard cost per unit Actual costs used in production of 12,000 units Direct materials 1.80 feet at $6.00 per foot 24,000 feet purchased at a total cost of $139,800, used only 21,000 feet in production Direct labor 1.8 hours at $18.00 per hour 22,800 hours at $17.40 per hour. Variable overhead 1.8 hours at $10.00 per hour 22,800 hours at a total cost of $250,800 Required: 1, Compute the total standard costs and total actual costs for May’s production. How much is the difference in the total cost and unit cost? (Actual material costs should include actual costs of the materials used in production.) 2, Compute the following variances for May: a, Materials quantity and price variances. b, Labor efficiency and rate variances. c, Variable overhead efficiency and rate 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.
Question 2
Like Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.
|
|
Actual costs used in production of 12,000 units |
|
|
Direct materials |
1.80 feet at $6.00 per foot |
24,000 feet purchased at a total cost of $139,800, used only 21,000 feet in production |
|
Direct labor |
1.8 hours at $18.00 per hour |
22,800 hours at $17.40 per hour. |
|
Variable overhead |
1.8 hours at $10.00 per hour |
22,800 hours at a total cost of $250,800 |
Required:
1, Compute the total standard costs and total actual costs for May’s production. How much is the difference in the total cost and unit cost? (Actual material costs should include actual costs of the materials used in production.)
2, Compute the following variances for May:
a, Materials quantity and price variances.
b, Labor efficiency and rate variances.
c, Variable overhead efficiency and rate variances.
Step by step
Solved in 4 steps
