Safe and Sound Limited (SSL) produces chain link fencing for security fencing. The standard prime costs for each metre of fencing is given below: Standard prime costs: Standard Material Input cost per unit Standard labour costs Total standard product cost per unit 400.0 metres wire 0.25 hour $0.40 per metr $ 160.00 $42.00 per hour $ 10.50 $ 170.50 During the year SSL produced 150,000 linear metres of their chain link product. Actual costs during the period: During the year, SSL purchased 75,000,000 metres of the raw wire used to make their product for a cost of $30,750,000. (This was the only stock used for all production this year) SSL used 61,200,000 metres of wire (all at the purchased price per me) and they worked 36,750 Direct labour hours at a total cost of $1,572,510. Required: Calculate the Direct Material Quantity Variance NOTE: YOU MUST INDICATE IF THE VARIANCE IS FAVOURABLE (F) OR UNFAVOURABLE (U). FOR EXAMPLE TO ENTER 1000 UNFAVOURABLE, ENTER 1000U. NOTE THIS IS AN UPPER CASE LETTER, LOWER CASE (u or f) WILL LEAD TO A REDUCTION IN MARKS.
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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