Question 3 Lindin Inc, produces key ingredient for liquid laundry detergents. Two chemical solutions, A and B, are mixed and heated to produce a cleansing chemical that is sold to companies that produce the liquid detergents. The cleansing ingredient is produced in batches and has the following standards: Required: Direct material 3.1 3.2 A B Total Standard mix 15 000 litres 5 000 litres Standard price R20 per litre R30 per litre Yield should amount to 15 000 litres. During March, the following actual production information was provided: Direct material A Actual mix 140 000 litres 60 000 litres B 200 000 litres 158 400 litres Total Yield unit Standard cost R300 000 R150 000 R450 000 Calculate the direct materials mix and yield variances. Calculate the total direct materials usage variance for A and B. Show that the total direct materials usage variance is equal to the sum of direct materials mix and yield variances
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.
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