Question 11 Blue Corporation accumulates the following data relative to jobs started and finished during the month of June 2017. Costs and Production Data Actual Standard Raw materials unit cost $2.40 $2.20 Raw materials units used 11,000 10,100 Direct labor payroll $177,600 $173,280 Direct labor hours worked 14,800 15,200 Manufacturing overhead incurred $235,636 Manufacturing overhead applied $238,336 Machine hours expected to be used at normal capacity 41,500 Budgeted fixed overhead for June $70,550 Variable overhead rate per machine hour $3.20 Fixed overhead rate per machine hour $1.70 Overhead is applied on the basis of standard machine hours. 3.20 hours of machine time are required for each direct labor hour. The jobs were sold for $467,000. Selling and administrative expenses were $36,500. Assume that the amount of raw materials purchased equaled the amount used. 1) Total labor variance= $......... (Favorable/Unfavorable/Neither favorable nor unfavorable) Labor price variance= $............. (F/U/N) Labor quantity variance= $........... (F/U/N) 2) Compute the total overhead variance. Total overhead variance $............ (F/UF/N) 3) Prepare an income statement for management. (Ignore income taxes.) (Round answers to 0 decimal places, e.g. 135.)
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.
Question 11
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Costs and Production Data
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Actual
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Standard
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||
| Raw materials unit cost | $2.40 | $2.20 | ||
| Raw materials units used | 11,000 | 10,100 | ||
| Direct labor payroll | $177,600 | $173,280 | ||
| Direct labor hours worked | 14,800 | 15,200 | ||
| Manufacturing |
$235,636 | |||
| Manufacturing overhead applied | $238,336 | |||
| Machine hours expected to be used at normal capacity | 41,500 | |||
| Budgeted fixed overhead for June | $70,550 | |||
| Variable overhead rate per machine hour | $3.20 | |||
| Fixed overhead rate per machine hour | $1.70 |
Overhead is applied on the basis of standard machine hours. 3.20 hours of machine time are required for each direct labor hour. The jobs were sold for $467,000. Selling and administrative expenses were $36,500. Assume that the amount of raw materials purchased equaled the amount used.
| Total overhead variance | $............
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(F/UF/N)
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3) Prepare an income statement for management. (Ignore income taxes.) (Round answers to 0 decimal places, e.g. 135.)
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