The production department supervisor receives biweekly reports of the standard cost of the workforce. The following is the most recent report: Total labor applied to production $91 650 Total wages paid $107 200 Unfavorable variation $ 15 550 Hours applied 9 300 Actual hours worked 11 750 Based on the experience of the past months, the supervisor has been asked to explain the reasons that originated the unfavorable variations obtained: a) Calculate the standard and actual rates for the period b) Determine the variation in labor rate c) Find the variation in labor efficiency.
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 production department supervisor receives biweekly reports of the
workforce. The following is the most recent report:
|
Total labor applied to production |
$91 650 |
| Total wages paid | $107 200 |
| Unfavorable variation | $ 15 550 |
| Hours applied | 9 300 |
| Actual hours worked | 11 750 |
Based on the experience of the past months, the supervisor has been asked to explain the reasons that originated the unfavorable variations obtained:
a) Calculate the standard and actual rates for the period
b) Determine the variation in labor rate
c) Find the variation in labor efficiency.
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