Question No. X-Compuny produces a single product. Variable manufacturing overhead is applied to production on the basis of direct labour hours. The standard costs per unit are as follows; Direct Material: 6 ounces@$0.50 per ounce Direct Labour: 2 hours@s9 per hour Variable Manufacturing Overhead: 2 hourses4.5per hour Total Standard Variable cost per unit S03 S18 S02 $30 During June, 2000 units were produced. The costs attached with the production were as follows: Material purchased: 18,000 ounces@ $0.6 per ounce Material used in production: 14000 ounces Direct Labour: 4400hours es8.75 per hour Variable Manufacturing Overhead costs incurred SI0,800 S38.500 S20,680 Required: Compute the Direct Material Price & quantity variance, Direct Labour Rate & Efficiency variance and Variable manufacturing overhead spending & 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.
Question No.1
X-Company produces a single product. Variable manufacturing
Direct Material: 6 ounces@$0.50 per ounce $03
Direct Labour: 2 hours@$9 per hour $18
Variable Manufacturing Overhead: 2 hours@$4.5per hour $09
Total Standard Variable cost per unit $30
During June, 2000 units were produced. The costs attached with the production were as follows:
Material purchased: 18,000 ounces@$0.6 per ounce $10,800
Material used in production: 14000 ounces ----- Direct Labour: 4400hours @$8.75 per hour $38,500
Variable
Required:
Compute the Direct Material Price & quantity variance, Direct Labour Rate & Efficiency variance and Variable manufacturing overhead spending & efficiency variance.
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