Robeson Company estimates it will produce and sell 3,000 units next month. Data on costs follows: Per unit costs: Selling price…………………………………………………… $11.00 Variable manufacturing costs………………………………… $5.75 Variable selling costs…………………………………………. $0.25 Total costs: Fixed manufacturing costs…………………………………....... $4,500 Fixed selling costs……………………………………………... $ 500 Using the following example, identify AND calculate the two cost variances, AND the TOTAL DM Variance, associated with the example (Direct Materials Price Variance; Direct Materials Efficiency Variance). Standard costs for producing 1,000 units of a product are 1,600 pounds of material at $9.00 per pound. Actual costs for producing 1,000 units of the product were 1,500 pounds of material at $9.25 per pound.
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.
Robeson Company estimates it will produce and sell 3,000 units next month. Data on costs follows:
|
Per unit costs: |
|
|
Selling price…………………………………………………… |
$11.00 |
|
Variable |
$5.75 |
|
Variable selling costs…………………………………………. |
$0.25 |
|
|
|
|
Total costs: |
|
|
Fixed manufacturing costs…………………………………....... |
$4,500 |
|
Fixed selling costs……………………………………………... |
$ 500 |
Using the following example, identify AND calculate the two cost variances, AND the TOTAL DM Variance, associated with the example (Direct Materials Price Variance; Direct Materials Efficiency Variance).
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