The Grayson Company uses standard costs to account for its production of a specialty cleaning product called Green Clean. The standard cost of materials and direct labour to produce one bottle of Green Clean is as follows: Material A Material B. Direct labour 1.5 litres at $0.80 per litre 0.5 litres at $2.00 per litre 0.25 hours at $10.00 per hour $ 1.20 1.00 2.50 Both material A and material B are added at the start of the process. Production data for June 2016 are as follows: Beginning work in process, 5,000 units, 25% complete. Started during June, 18,000 units. Ending work in process, 6,000 units, 60% complete. No units were spoiled. 28,000 litres of material A was issued to production. 12,000 litres of material B was used during June. Direct labour worked totalled 4,800 hours at a cost of $50,000 for the month. Required: Determine all of the material and labour variances possible from the preceding data for the month of
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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