The following information was obtained from KMG Manufacturing Company. Standard Data: Direct material 4 yards @ $4 per yard Direct labour 3 hours @ $6 per hour Variable manufacturing overheads $2 per hour Actual Data: Direct material 48,000 yards @ $4.20 per yard Direct labour 34,000 hours @ $5.20 per hour Variable manufacturing overhead 34,000 hours totalling $80,000 Actual units produced 18,000 Required: Compute the direct material price variance. Calculate the direct material usage variance. Total Direct Material Cost 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.
The following information was obtained from KMG Manufacturing Company.
Standard Data:
Direct material 4 yards @ $4 per yard
Direct labour 3 hours @ $6 per hour
Variable manufacturing
Actual Data:
Direct material 48,000 yards @ $4.20 per yard
Direct labour 34,000 hours @ $5.20 per hour
Variable manufacturing overhead 34,000 hours totalling $80,000
Actual units produced 18,000
Required:
- Compute the direct material price variance.
- Calculate the direct material usage variance.
- Total Direct Material Cost variance.
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