Sohar Chemical Industries provide the following information from their production records: For making 10 units the standard material and labor requirement is Material Quantity per unit Total Amount (RO) A 8 48 B 4 16 Labor Hours per unit Total Amount (RO) Helper 50 350 Fitter 40 400 During April 8 units were produced. The actual consumption of material and labor is as under: Material Quantity per unit Total Amount (RO) A 7 49 B 5 25 Labor Hours per unit Total Amount (RO) Helper 30 450 Fitter 50 350 calculating Labor Variance
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.
Sohar Chemical Industries provide the following information from their production records:
For making 10 units the standard material and labor requirement is
|
Material |
Quantity per unit |
Total Amount (RO) |
|
A |
8 |
48 |
|
B |
4 |
16 |
|
|
||
|
Labor |
Hours per unit |
Total Amount (RO) |
|
Helper |
50 |
350 |
|
Fitter |
40 |
400 |
During April 8 units were produced. The actual consumption of material and labor is as under:
|
Material |
Quantity per unit |
Total Amount (RO) |
|
A |
7 |
49 |
|
B |
5 |
25 |
|
|
||
|
Labor |
Hours per unit |
Total Amount (RO) |
|
Helper |
30 |
450 |
|
Fitter |
50 |
350 |
calculating Labor Variance
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