Milton6 Company uses a standard cost system in which manufacturing overhead costs are applied to units of product (widgets) on the basis of direct labor hours. Standards call for 2 direct labor hours per widget. The standard labor rate is $10 per hour. Four pounds of material are needed for each widget at a standard cost of $2.25 per pound. The standard variable overhead rate is $3.50 per direct labor hour. Miltonó actually produces 17,000 widgets during the year. Direct labor costs are $359,100 for 34,200 hours. Milton6 purchases 70,000 pounds of materials at $2.50 per pound, and used 65,400 pounds of those materials (the rest are in inventory at the end of the year) Actual variable overhead costs $92,000. For variable overhead, compute the spending(price) variance and label it is favorable (F) or unfavorable (U). A. 700 F B. 32,500 F C. 27,700 U 700 U E. 32,500 U F. 27,700 F G. 27,000 U Н. 27,000 F D.
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.
Step by step
Solved in 2 steps
