Calculate the total standard direct material costs and direct labour costs for January. 2. For the month of January, calculate the following variances, indicating whether each is favourable or unfavourable: (a) direct material price variance (b) direct material quantity variance (c) direct labour rate variance (d) direct labour efficiency variance. 3. Demonstrate how the solution will change if the following information changes: the standard direct labour rate is $40 per hour and the standard direct material price is $3 per kilogram. need to solve question number 3.
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.
Q1. During January, Microchem Ltd produced 1000 units of a special product called Stylex, and the accounting records indicated the following:
Direct material purchased 36 000 kilograms @ $2.76 per kilogram
Direct material used 19 000 kilograms
Direct labour 4 200 hours @ $36 per hour
Stylex has the following
Direct material: 20 kilograms @ $2.70 per kilogram $ 54.00
Direct labour hours: 4 hours @ $34 per hour 136.00
Standard prime cost per unit $190.00
Required:
1. Calculate the total standard direct material costs and direct labour costs for January.
2. For the month of January, calculate the following variances, indicating whether each is favourable or unfavourable:
(a) direct material price variance
(b) direct material quantity variance
(c) direct labour rate variance
(d) direct labour efficiency variance.
3. Demonstrate how the solution will change if the following information changes: the standard direct labour rate is $40 per hour and the standard direct material price is $3 per kilogram.
need to solve question number 3.
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