Little Company uses a standard costing system. The following monthly cost functions apply to its manufacturing overhead items: Overhead Item Cost Function Indirect materials P0.80 per DLH P1.00 per DLH PO.40 per DLH P8,000 Р32,000 Indirect labor Utilities Insurance Depreciation Information for the month of October is as follows: Actual overhead costs incurred: Indirect materials P20,800 24,000 9,600 8,800 32,000 P95,200 Indirect labor Utilities Insurance Depreciation Total Actual direct labor hours worked 24,000 27,000 Standard direct labor hours allowed for production achieved Little uses expected capacity to calculate standard overhead rates. The monthly expected capacity is 25,000 hours. Required: а. Calculate the following standard overhead rates based upon expected capacity:
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.
![b. Calculate the following variances:
1. Variable overhead spending variance
2. Variable overhead efficiency variance
3. Fixed overhead spending variance
4. Fixed overhead volume variance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7dd8f64f-cd87-4e48-a5a0-11723511ce53%2Ff5d1b185-ef29-445f-bd20-f97521f03f1b%2F2n9niz99_processed.png&w=3840&q=75)
![Little Company uses a standard costing system. The following monthly cost functions apply to its
manufacturing overhead items:
Cost Function
PO.80 per DLH
P1.00 per DLH
P0.40 per DLH
P8,000
P32,000
Overhead Item
Indirect materials
Indirect labor
Utilities
Insurance
Depreciation
Information for the month of October is as follows:
Actual overhead costs incurred:
Indirect materials
P20,800
24,000
9,600
8,800
32,000
P95,200
Indirect labor
Utilities
Insurance
Depreciation
Total
Actual direct labor hours worked
24,000
Standard direct labor hours allowed for production achieved
27,000
Little uses expected capacity to calculate standard overhead rates. The monthly expected
capacity is 25,000 hours.
Required:
а.
Calculate the following standard overhead rates based upon expected capacity:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7dd8f64f-cd87-4e48-a5a0-11723511ce53%2Ff5d1b185-ef29-445f-bd20-f97521f03f1b%2F0yjoyls_processed.png&w=3840&q=75)
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