Trini Company set the following standard costs per unit for its single product Direct materials (30 pounds @ $4.40 per pound) $ 132.00 Direct labor (6 hours @ $14 per hour) 84.00 Variable overhead (6 hours @ $8 per hour) 48.00 Fixed overhead (6 hours @ $12 per hour) 72.00 Standard cost per unit $ 336.00 Overhead is applied using direct labor hours. The standard overhead rate is based on a predicted activity level of 80% of the company’s capacity of 69,000 units per quarter. The following additional information is available. Operating Levels 70% 80% 90% Production (in units) 48,300 55,200 62,100 Standard direct labor hours (6 DLH/unit) 289,800 331,200 372,600 Budgeted overhead (flexible budget) Fixed overhead $ 3,974,400 $ 3,974,400 $ 3,974,400 Variable overhead $ 2,318,400 $ 2,649,600 $ 2,980,800 During the current quarter, the company operated at 90% of capacity and produced 62,100 units; actual direct labor totaled 291,000 hours. Units produced were assigned the following standard costs. Direct materials (1,863,000 pounds @ $4.40 per pound) $ 8,197,200 Direct labor (372,600 hours @ $14 per hour) 5,216,400 Overhead (372,600 hours @ $20 per hour) 7,452,000 Standard (budgeted) cost $ 20,865,600 Actual costs incurred during the current quarter follow. Direct materials (1,466,000 pounds @ $7.40 per pound) $ 10,848,400 Direct labor (291,000 hours @ $12.60 per hour) 3,666,600 Fixed overhead 3,014,600 Variable overhead 3,272,200 Actual cost $ 20,801,800 rev: 09_30_2021_QC_CDR-376 Required: 1. Compute the direct materials variance, including its price and quantity variances. 2. Compute the direct labor variance, including its rate and efficiency variances. 3. Compute the overhead controllable and volume variances.
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.
Trini Company set the following
| Direct materials (30 pounds @ $4.40 per pound) | $ 132.00 |
|---|---|
| Direct labor (6 hours @ $14 per hour) | 84.00 |
| Variable |
48.00 |
| Fixed overhead (6 hours @ $12 per hour) | 72.00 |
| Standard cost per unit | $ 336.00 |
Overhead is applied using direct labor hours. The standard overhead rate is based on a predicted activity level of 80% of the company’s capacity of 69,000 units per quarter. The following additional information is available.
| Operating Levels | |||
|---|---|---|---|
| 70% | 80% | 90% | |
| Production (in units) | 48,300 | 55,200 | 62,100 |
| Standard direct labor hours (6 DLH/unit) | 289,800 | 331,200 | 372,600 |
| Budgeted overhead (flexible budget) | |||
| Fixed overhead | $ 3,974,400 | $ 3,974,400 | $ 3,974,400 |
| Variable overhead | $ 2,318,400 | $ 2,649,600 | $ 2,980,800 |
During the current quarter, the company operated at 90% of capacity and produced 62,100 units; actual direct labor totaled 291,000 hours. Units produced were assigned the following standard costs.
| Direct materials (1,863,000 pounds @ $4.40 per pound) | $ 8,197,200 |
|---|---|
| Direct labor (372,600 hours @ $14 per hour) | 5,216,400 |
| Overhead (372,600 hours @ $20 per hour) | 7,452,000 |
| Standard (budgeted) cost | $ 20,865,600 |
Actual costs incurred during the current quarter follow.
| Direct materials (1,466,000 pounds @ $7.40 per pound) | $ 10,848,400 |
|---|---|
| Direct labor (291,000 hours @ $12.60 per hour) | 3,666,600 |
| Fixed overhead | 3,014,600 |
| Variable overhead | 3,272,200 |
| Actual cost | $ 20,801,800 |
rev: 09_30_2021_QC_CDR-376
Required:
1. Compute the direct materials variance, including its price and quantity variances.
2. Compute the direct labor variance, including its rate and efficiency variances.
3. Compute the overhead controllable and volume variances.
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