Mortensen manufactures wooden toys. It uses a standard costing system to control costs. The cutting department cuts the shapes which are sold as toy animals. $ Hardwood 16.00 Direct labour 30 minutes at $9 per hour 4.50 Fixed overhead 30 minutes at $4 per direct labour hour 2.00 22.50 Fixed overhead absorption rates are based upon monthly fixed overheads of $26,000 and a budgeted monthly output of 13,000 sets of animals. In the most recent month 14,000 sets of animals were made. 8,000 direct labour hours were worked and paid at $9.25 per hour. Actual fixed overheads were $23,000 for the month. Calculate the following variances from standard cost for the most recent month. (i) Fixed overhead expenditure
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.
Mortensen manufactures wooden toys. It uses a
department cuts the shapes which are sold as toy animals.
$
Hardwood 16.00
Direct labour 30 minutes at $9 per hour 4.50
Fixed overhead 30 minutes at $4 per direct labour hour 2.00
22.50
Fixed overhead absorption rates are based upon monthly fixed
monthly output of 13,000 sets of animals.
In the most recent month 14,000 sets of animals were made. 8,000 direct labour hours were worked
and paid at $9.25 per hour. Actual fixed overheads were $23,000 for the month.
Calculate the following variances from standard cost for the most recent month.
(i) Fixed overhead expenditure
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