Q#5 the normal capacity of a plant is 40,000 direct labor hours per month. At normal capacity, the budgeted factory overhead is Rs. 2.11 per direct labor hour, consisting of Rs. 24,000 fixed expense and Rs. 1.51 per hour variable expense. During June, the plant operated 36,000 direct labor hours, with actual factory overhead of Rs. 80,000. The standard for the capacity attained is 35,000 hours. Required: an analysis of factory overhead using the one-two-three and four variance methods
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.
Step by step
Solved in 3 steps with 3 images
