Required What is the standard direct material amount per garden spade? What is the standard cost allowed for all units produced? What is the total direct materials flexible-budget variance? What is the direct material flexible-budget rate variance? What is the total actual cost of direct manufacturing labour? What is the labour rate variance for direct manufacturing labour?
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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Question 2.2
The following data for the Golden Garden Company (GGC) pertains to the production of 2,500 garden spades during April. The spade consists of a wooden handle and a metal forged tool that comes in contact with the ground.
Direct Materials (all materials purchased were used):
Standard cost : $1.00 per handle and $3.50 per metal tool
- Total actual cost: $11,350.
- Materials flexible-budget efficiency variance was $650 unfavourable.
Direct Manufacturing Labour:
- Standard cost is 5 garden spades per hour at $20.00 per hour.
- Actual cost per hour was $21.00
- Labour efficiency variance was $400 favourable.
Required
- What is the standard direct material amount per garden spade?
- What is the standard cost allowed for all units produced?
- What is the total direct materials flexible-
budget variance ? - What is the direct material flexible-budget rate variance?
- What is the total actual cost of direct manufacturing labour?
- What is the labour rate variance for direct manufacturing labour?
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