Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 40,000 units of product were as follows: Standard Costs Actual Costs Direct materials 120,000 lb. at $3.20 118,500 lb. at $3.25 Direct labor 12,000 hrs. at $24.40 11,700 hrs. at $25.00 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 15,000 direct labor hrs.: Variable cost, $8.00 $91,200 variable cost Fixed cost, $10.00 $150,000 fixed cost Each unit requires 0.3 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct materials price variance $ Unfavorable Direct materials quantity variance Favorable Total direct materials cost variance $ Unfavorable b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct labor rate variance $ Unfavorable Direct labor time variance Favorable Total direct labor cost variance $ Favorable c. Determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Variable factory overhead controllable variance $ Favorable Fixed factory overhead volume variance Unfavorable Total factory overhead cost variance $ Unfavorable
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.
Mackinaw Inc. processes a base chemical into plastic.
Standard Costs
Actual Costs
Direct materials
120,000 lb. at $3.20
118,500 lb. at $3.25
Direct labor
12,000 hrs. at $24.40
11,700 hrs. at $25.00
Factory overhead
Rates per direct labor hr.,
based on 100% of normal
capacity of 15,000 direct
labor hrs.:
Variable cost, $8.00
$91,200 variable cost
Fixed cost, $10.00
$150,000 fixed cost
Each unit requires 0.3 hour of direct labor.
Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Direct materials price variance
$
Unfavorable
Direct materials quantity variance
Favorable
Total direct materials cost variance
$
Unfavorable
b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Direct labor rate variance
$
Unfavorable
Direct labor time variance
Favorable
Total direct labor cost variance
$
Favorable
c. Determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total
Variable factory overhead controllable variance
$
Favorable
Fixed factory overhead volume variance
Unfavorable
Total factory overhead cost variance
$
Unfavorable
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
