Acadia Company uses standard costs to account for its production of ZIP. The standard cost of one unit is given below: Material A: 20.00 kilograms @ €1.00 = €20.00 Material B: 5.00 kilograms @ 2.40 = 12.00 Direct labour: 4.75 hours @ 15.00 = 71.25 Each material is added at the beginning of the process. Production data for June, 20X9, are as follows: a.Beginning work in progress, 15,000 units, 20% complete b.Started during the month, 37,000 c.Ending work in progress, 14,000 units, 75% complete d.Material A issued to production, 750,000 kilograms e.Material B issued to production, 184,000 kilograms f.Direct labour cost was €3,248,250 for 213,000 hours g.Assume that materials A and B are perfect substitutes. Required: on the sheet a. What is the material mix variance for material A? For material B? b.What is the material yield 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.
Acadia Company uses standard costs to account for its production of ZIP. The
Material A: 20.00 kilograms @ €1.00 = €20.00
Material B: 5.00 kilograms @ 2.40 = 12.00
Direct labour: 4.75 hours @ 15.00 = 71.25
Each material is added at the beginning of the process. Production data for June, 20X9, are as follows:
a.Beginning work in progress, 15,000 units, 20% complete
b.Started during the month, 37,000
c.Ending work in progress, 14,000 units, 75% complete
d.Material A issued to production, 750,000 kilograms
e.Material B issued to production, 184,000 kilograms
f.Direct labour cost was €3,248,250 for 213,000 hours
g.Assume that materials A and B are perfect substitutes.
Required: on the sheet
a. What is the material mix variance for material A? For material B?
b.What is the material yield variance?
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