Eliezrie Corporation makes a product with the following standard costs: Standard Quanity or Hours Standard Price or Rate Standard Cost per unit Direct Materials 6.5 kilos $1 per kilo $6.50 Direct Labor 0.3 hours $10 per hour $3.00 Variable Overhead 0.3 hours $4 per hour $1.20 In January the company's budgeted production was 7,400 units but the actual production was 7,500 units. The company used 45,580 kilos of the direct material and 2,030 direct labor-hours to produce this output. During the month, the company purchased 48,500 kilos of the direct material at a cost of $53,350. The actual direct labor cost was $18,473 and the actual variable overhead cost was $7,714. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is: Select one: a. $4,875 F b. $4,875 U c. $4,850 U d. $4,850
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.
Eliezrie Corporation makes a product with the following
| Standard Quanity or Hours | Standard Price or Rate | Standard Cost per unit | |
| Direct Materials | 6.5 kilos | $1 per kilo | $6.50 |
| Direct Labor | 0.3 hours | $10 per hour | $3.00 |
| Variable Overhead | 0.3 hours | $4 per hour | $1.20 |
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for January is:
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