Material Cost variance Labour Cost variance Fixed Overhead Cost variance
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.
Vema Ltd has the details of production:
Material 10 kg @ Rs.10 per kg
Labour 6 hours @ Rs.5.50 per hour
Variable overhead 6 hours @ Rs.10 per hour
Fixed overhead amounting to 4,50,000 per month (Normal volume of 30,000 labour hours.)
Actual cost data for the month of August 2017 are:
Material =50,000 kg at a cost of 5,25,000
Labour =Rs.1,55,000 for 31,000 hours worked
Variable
Fixed overheads =4,70,000
Actual production 4,800 units.
Compute:
- Material Cost variance
- Labour Cost variance
- Fixed Overhead Cost variance
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