Lucia Company has set the following standard cost per unit for direct materials and direct labor. Direct materials (16 pounds @ $3 per pound) $ 48 Direct labor (3 hours @ $15 per hour) 45 During May the company incurred the following actual costs to produce 8,400 units. Direct materials (137,500 pounds @ $2.80 per pound) $ 385,000 Direct labor (29,700 hours @ $15.10 per hour) 448,470 AR = Actual Rate SR = Standard Rate AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price (1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate variance and the direct labor efficiency variance.
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.
Lucia Company has set the following
| Direct materials (16 pounds @ $3 per pound) | $ 48 |
|---|---|
| Direct labor (3 hours @ $15 per hour) | 45 |
During May the company incurred the following actual costs to produce 8,400 units.
| Direct materials (137,500 pounds @ $2.80 per pound) | $ 385,000 |
|---|---|
| Direct labor (29,700 hours @ $15.10 per hour) | 448,470 |
SR = Standard Rate
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
(1) Compute the direct materials price and quantity variances.
(2) Compute the direct labor rate variance and the direct labor efficiency variance.
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