Firewall Company makes 300-gallon plastic water tanks for a variety of commercial uses. The standard per unit material, labor and overhead costs are as follows: Direct materials: 80 pounds @ P 2 P 160 Direct Labor: 1.25 hours @ P 16 per hour 20 Variable Overhead: 30 minutes of machine time @ P50 per hour 25 Fixed overhead: 30 minutes of machine time @ P 40 per hour 20 The overhead application rates were developed using a normal capacity of 6,000 units per year. Production is assumed to occur evenly throughout the year. During May 2020 the company produced 525 tanks. Actual data for May 2020 are as follows: Direct materials purchased: 46,000 pounds @ P1.92 per pound Direct materials used: 43,050 pounds (all from May’s purchases) Total labor costs: P 10,988.25 for 682.5 hours Variable overhead incurred: P 13,770 for 270 hours of machine time Fixed overhead incurred: P 10,600 for 270 hours of machine time. Required: A. Determine the following 4. Variable overhead spending and efficiency variance 5. Fixed overhead spending and volume variance 6. Total factory overhead variance 7. 2-way, 3-way, 4-way variances for factory overhead B. Record all entries
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.
Firewall Company makes 300-gallon plastic water tanks for a variety of commercial uses. The
standard per unit material, labor and
Direct materials: 80 pounds @ P 2 P 160
Direct Labor: 1.25 hours @ P 16 per hour 20
Variable Overhead: 30 minutes of machine time @ P50 per hour 25
Fixed overhead: 30 minutes of machine time @ P 40 per hour 20
The overhead application rates were developed using a normal capacity of 6,000 units per year.
Production is assumed to occur evenly throughout the year. During May 2020 the company
produced 525 tanks. Actual data for May 2020 are as follows:
Direct materials purchased: 46,000 pounds @ P1.92 per pound
Direct materials used: 43,050 pounds (all from May’s purchases)
Total labor costs: P 10,988.25 for 682.5 hours
Variable overhead incurred: P 13,770 for 270 hours of machine time
Fixed overhead incurred: P 10,600 for 270 hours of machine time.
Required:
A. Determine the following
4. Variable overhead spending and efficiency variance
5. Fixed overhead spending and volume variance
6. Total factory overhead variance
7. 2-way, 3-way, 4-way variances for factory overhead
B. Record all entries
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