Answered: Company monthly produces Product Z.…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1PA: Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the...

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Company monthly produces Product Z. Each unit of Z requires 5 units of material A and 5 units of material B. Each unit of material A and B has standard unit cost P20 and P25, respectively. To produce 10,000 units of Z, it will require 10,000 labor hours at standard rate of P50 per hour. In December 2020, the entity used 45,000 units at P19 of A and 55,000 units at P26 of B, 12,000 labor hours at P45 per hour. Which of the following is the result of any of the material or labor variance? P60,000 Unfavorable P25,000 Favorable P35,000 Unfavorable P40.000 Favorable

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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