UTAH CORP. is a chemical manufacturer that supplies various products to industrial users. The company plans to introduce a new chemical solution called Bysap, for which it needs to develop a standard product cost. The following labor information is available on the production of Bysap. The product, which is bottled in 10-liter containers, is primarily a mixture of Byclyn, Salex, and Protet. The finished product is highly unstable, and one 10-liter batch out of six is rejected at the final inspection. Rejected batches have no commercial value and are thrown out. It takes a worker 35 minutes to process one 10-liter batch of Bysap. Employees work on eight-hour a day, including one hour per day for rest breaks and cleanup. What is the standard labor time to produce one 10-liter batch of Bysap?
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.
- UTAH CORP. is a chemical manufacturer that supplies various products to industrial users. The company plans to introduce a new chemical solution called Bysap, for which it needs to develop a
standard product cost. The following labor information is available on the production of Bysap.
- The product, which is bottled in 10-liter containers, is primarily a mixture of Byclyn, Salex, and Protet.
- The finished product is highly unstable, and one 10-liter batch out of six is rejected at the final inspection. Rejected batches have no commercial value and are thrown out.
- It takes a worker 35 minutes to process one 10-liter batch of Bysap. Employees work on eight-hour a day, including one hour per day for rest breaks and cleanup.
What is the standard labor time to produce one 10-liter batch of Bysap?
2. MAINE INC.’s direct labor costs for the month of May are as follows:
Standard direct labor hours allowed 12,500
Actual direct labor rate P8.25
Actual direct labor hours 10,000
Direct labor rate variance – favorable P5,600
What was MAINE's standard direct labor rate in May? (M)
3. The following information is available from the KANSAN CORP.:
Actual factory O/H P15,000
Fixed O/H expenses, actual P7,200
Fixed O/H expenses, budgeted P7,000
Actual hours 3,500
Standard hours 3,800
Variable O/H rate per DLH P2.50
Assuming that Tyro uses a three-way analysis of O/H variances, what is the spending variance?
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