Erie Company manufactures a mobile fitness device called the Jogging Mate. The company's labor standards for one Jogging Mate are as follows: Standard Standard Rate Hours per Hour $5.60 30 minutes Standard Cost $ 2.80 During August, 10,660 hours of direct labor time were needed to make 19,900 units of the Jogging Mate. The direct labor cost totaled $58,630 for the month. Required: 1. What is the standard labor-hours allowed (SH) to makes 19,900 Jogging Mates? 2. What is the standard labor cost allowed (SH x SR) to make 19,900 Jogging Mates? 3. What is the labor spending variance? 4. What are the labor rate variance and the labor efficiency variance? 5. The budgeted variable manufacturing overhead rate is $4.30 per direct labor-hour. During August, the company incurred $51,168 in variable manufacturing overhead cost. Compute the variable overhead rate and efficiency variances for the month. Note: For requirements 3 through 5, indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations. 1. Standard labor-hours allowed 2. Standard labor cost allowed 3. Labor spending variance 4. Labor rate variance 4. Labor efficiency variance 5. Variable overhead rate variance 5. Variable overhead efficiency variance
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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