Western Manufacturing produces a single product. The original budget for April was based on expected production of 17,500 units; actual production for April was 16,600 units. The original budget and actual costs incurred for the manufacturing department follow: Original Budget Actual Costs Direct materials $ 275,625 $ 270,750 Direct labor 213,500 206,750 Variable overhead 107,625 97,625 Fixed overhead 85,000 86,250 Total $ 681,750 $ 661,375
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.
Western Manufacturing produces a single product. The original budget for April was based on expected production of 17,500 units; actual production for April was 16,600 units. The original budget and actual costs incurred for the manufacturing department follow:
| Original Budget | Actual Costs | ||||
| Direct materials | $ | 275,625 | $ | 270,750 | |
| Direct labor | 213,500 | 206,750 | |||
| Variable |
107,625 | 97,625 | |||
| Fixed overhead | 85,000 | 86,250 | |||
| Total | $ | 681,750 | $ | 661,375 | |
Required:
Prepare an appropriate performance report for the manufacturing department. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)
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