Milar Corporation makes a product with the following standard costs: Standard Quantity or Standard Price or Hours Rate $ 5.50 per pound $ 24.00 per hour $ 11.00 per hour Direct materials 6.0 pounds Direct labor 0.8 hours Variable overhead 0.8 hours In January the company produced 3,350 units using 13,400 pounds of the direct material and 2,800 direct labor-hours. During the month, the company purchased 14,160 pounds of the direct material at & cost of $35,100. The actual direct labor cost was $66,796 and the actual variable overhead cost was $29,508. 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 labor rate variance for January is:
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.
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