Soriano Manufacturing Company uses a standard cost accounting system to account for the manufacturing of exhaust fans. In July 2020, it accumulates the following data for 1.550 units started and finished: Cost and Production Data Raw materials Units purchased Units used Unit cost Direct labour Hours worked Hourly rate Manufacturing overhead Incurred Applied Actual 21,400 21,400 $3.60 3,500 $11.75 $100.900 Standard 21,800 $3.20 3,700 $12.05 $118,400 Manufacturing overhead was applied based on direct labour hours. Normal capacity for the month was 3,400 direct labour hours. At normal capacity, budgeted overhead costs were $22 per labour hour variable and $10 per labour hour fixed. Total budgeted fixed overhead costs were $34,000. Jobs finished during the month were sold for $282,500. Selling and administrative expenses were $24,600. Prepare an income statement for management showing the variances. Ignore income taxes. SORIANO MANUFACTURING COMPANY Income Statement For the Month Ended July 31, 2020 $ $
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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