The following standard costs were developed for one of the products of ELJAY Sdn Bhd (ESB): STANDARD COST PER UNIT RM Direct materials 3 feet @ RM4.00 per foot 12.00 Direct labor 5 hours @ RM8.00 per hour 40.00 Variable overhead 5 hours @ RM4.00 per hour 20.00 Fixed overhead 5 hours @ RM6.00 per hour 30.00 Total standard cost per unit 102.00 The following information is available regarding the company's operations for the period: Units produced 40,000 Materials purchased 240,000 feet at RM4.40 per foot Materials used 150,000 feet Direct labor 220,000 hours at RM8.30 per hour Overhead incurred: Variable RM770,000 Fixed RM900,000 Budgeted fixed overhead for the period is RM960,000, and the standard fixed overhead rate is based on the expected capacity of 160,000 direct labor hours. REQUIRED: fixed overhead spending 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
STANDARD COST PER UNIT
RM
Direct materials 3 feet @ RM4.00 per foot 12.00
Direct labor 5 hours @ RM8.00 per hour 40.00
Variable
Fixed overhead 5 hours @ RM6.00 per hour 30.00
Total standard cost per unit 102.00
The following information is available regarding the company's operations for the period:
Units produced 40,000
Materials purchased 240,000 feet at RM4.40 per foot
Materials used 150,000 feet
Direct labor 220,000 hours at RM8.30 per hour
Overhead incurred:
Variable RM770,000
Fixed RM900,000
Budgeted fixed overhead for the period is RM960,000, and the standard fixed overhead rate is based on the expected capacity of 160,000 direct labor hours.
REQUIRED:
fixed overhead spending variance
fixed overhead volume variance
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