Sienna Inc. is a large producer of men's and women's clothing. The company uses standard costs for all its products. The standard costs and actual costs per unit of product for a recent period are given below for one of the company's product lines: Standard Cost Actual Cost Direct material: Standard: 4.0 metres at $5.40 per metre Actual: 4.4 metres at $5.05 per metre Direct labour: Standard: 1.6 hours at $6.75 per hour Actual: 1.4 hours at $7.30 per hour Variable overhead: Standard: 1.6 hours at $2.70 per hour Actual: 1.4 hours at $3.25 per hour Total cost per unit $21.60 10.80 4.32 $36.72 $22.22 10.22 4.55 $36.99 During this period, the company produced 4,800 units of this product. A comparison of standard and actual costs for the period on a total cost basis is given below: Actual costs: 4,800 units at $36.99 $177,552 Standard costs: 4,800 units at $36.72 176,256 Difference in cost-unfavourable $1.296 There was no inventory of materials on hand at the beginning of the period. During the period, 21,120 metres of materials were purchased, all of which were used in production. Required: a. For direct materials, compute the price and quantity variances for the period b. For direct labour, compute the rate and efficiency variances c. For variable overhead, compute the spending and efficiency variances.
Sienna Inc. is a large producer of men's and women's clothing. The company uses standard costs for all its products. The standard costs and actual costs per unit of product for a recent period are given below for one of the company's product lines: Standard Cost Actual Cost Direct material: Standard: 4.0 metres at $5.40 per metre Actual: 4.4 metres at $5.05 per metre Direct labour: Standard: 1.6 hours at $6.75 per hour Actual: 1.4 hours at $7.30 per hour Variable overhead: Standard: 1.6 hours at $2.70 per hour Actual: 1.4 hours at $3.25 per hour Total cost per unit $21.60 10.80 4.32 $36.72 $22.22 10.22 4.55 $36.99 During this period, the company produced 4,800 units of this product. A comparison of standard and actual costs for the period on a total cost basis is given below: Actual costs: 4,800 units at $36.99 $177,552 Standard costs: 4,800 units at $36.72 176,256 Difference in cost-unfavourable $1.296 There was no inventory of materials on hand at the beginning of the period. During the period, 21,120 metres of materials were purchased, all of which were used in production. Required: a. For direct materials, compute the price and quantity variances for the period b. For direct labour, compute the rate and efficiency variances c. For variable overhead, compute the spending and efficiency variances.
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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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Transcribed Image Text:Sienna Inc. is a large producer of men's and women's clothing. The
company uses standard costs for all its products. The standard costs
and actual costs per unit of product for a recent period are given
below for one of the company's product lines:
Direct material:
Standard: 4.0 metres at $5.40 per metre
Actual: 4.4 metres at $5.05 per metre
Direct labour:
Standard: 1.6 hours at $6.75 per hour
Actual: 1.4 hours at $7.30 per hour
Variable overhead:
Standard: 1.6 hours at $2.70 per hour
Actual: 1.4 hours at $3.25 per hour
Total cost per unit
Standard Cost Actual Cost
$21.60
10.80
4.32
$36.72
$22.22
10,22
4.55
$36.99
During this period, the company produced 4,800 units of this
product. A comparison of standard and actual costs for the period on
a total cost basis is given below:
Actual costs: 4,800 units at $36.99 $177,552
Standard costs: 4,800 units at $36.72 176,256
Difference in cost--unfavourable $1.296
There was no inventory of materials on hand at the beginning of the
period. During the period, 21,120 metres of materials were
purchased, all of which were used in production.
Required:
a. For direct materials, compute the price and quantity variances for
the period
b. For direct labour, compute the rate and efficiency variances
c. For variable overhead, compute the spending and efficiency
variances.
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