Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms × $12 per kilogram) = $60 per unit; direct labor (3.5 hours per unit × $20 per hour) = $70 per unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December: In-process beginning inventory None In-process ending inventory—80% complete as to labor 1,020 units Units completed during the period 6,820 units Budgeted output 7,380 units Purchases of materials (in kilograms) 43,000 Total actual direct labor cost incurred $ 538,748 Direct labor hours worked (AQ) 27,100 hours Materials purchase-price variance $ 4,300 favorable Increase in materials inventory in December 3,050 kilograms The actual total cost of direct materials used in production during December was:
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.
Q14
Shade Company adopted a
| In-process beginning inventory | None | |
|---|---|---|
| In-process ending inventory—80% complete as to labor | 1,020 | units |
| Units completed during the period | 6,820 | units |
| Budgeted output | 7,380 | units |
| Purchases of materials (in kilograms) | 43,000 | |
| Total actual direct labor cost incurred | $ 538,748 | |
| Direct labor hours worked (AQ) | 27,100 | hours |
| Materials purchase-price variance | $ 4,300 | favorable |
| Increase in materials inventory in December | 3,050 | kilograms |
The actual total cost of direct materials used in production during December was:
-
$478,481.
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$493,943.
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$476,675.
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$473,611.
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$475,405.
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