Production Ltd. produces specific widgets for machines. Managers of Production Ltd. have budgeted that to produce one widget it is necessary to use 2.52.5 labour hours. One labour hour is budgeted to cost £33. The actual labour hours worked to produce widgets are 4,2004,200 hours with a labour cost of £10,50010,500 to produce an actual amount of 10,25010,250 widgets. Use one decimals in your calculations. Considering this information, which of the following statements is true? a. The labour rate variance is favourable. b. The labour rate variance is unfavourable c. The standard labour rate is £2.52.5 and the actual labour rate is £33. d. None of the answers is true.
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.
Production Ltd. produces specific widgets for machines. Managers of Production Ltd. have budgeted that to produce one widget it is necessary to use 2.52.5 labour hours. One labour hour is budgeted to cost £33. The actual labour hours worked to produce widgets are 4,2004,200 hours with a labour cost of £10,50010,500 to produce an actual amount of 10,25010,250 widgets.
Use one decimals in your calculations.
Considering this information, which of the following statements is true?
a.
The labour rate variance is favourable.
b.
The labour rate variance is unfavourable
c.
The standard labour rate is £2.52.5 and the actual labour rate is £33.
d.
None of the answers is true.
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