Material price variance. Material quantity variance. Direct labor rate 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.
Max's Company's standard and actual costs per unit for the most recent period, during which 400 units were actually produced, are given below:
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Standard |
Actual |
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Materials: |
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Standard: 2 feet at $1.50 per foot................ |
$ 3.00 |
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Actual: 1.9 feet at $1.60 per foot................. |
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$ 3.04 |
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Direct labor: |
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Standard: 1.5 hours at $6.00 per hour.......... |
9.00 |
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Actual: 1.7 hours at $6.30 per hour.............. |
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10.71 |
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Variable manufacturing |
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Standard: 1.5 hours at $3.40 per hour.......... |
5.10 |
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Actual: 1.7 hours at $3.00 per hour.............. |
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5.10 |
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Total unit cost.................................................. |
$17.10 |
$18.85 |
All of the material purchased during the period was used in production during the period. Required:
From the foregoing information, compute the following variances. Indicate whether the variance is favorable (F) or unfavorable (U):
- Material price variance.
- Material quantity variance.
- Direct labor rate variance.
- Direct labor efficiency variance.
- Variable overhead spending variance.
- Variable overhead efficiency variance.
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