Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo: Standard Quantity Standard Price Direct materials 2.5 pounds $3 per pound Direct labor 0.6 hours $10 per hour During March 2022, the following activity was recorded by the company relating to the production of tybos: 1. The company produced 9,000 units during the month. 2. A total of 24,000 pounds of materials were purchased at a cost of $66,000. 3. A total of 24,000 pounds of materials were used in production. 4. 5,000 hours of labor were incurred during the month at a total wage cost of $55,000. Calculate the following variances for March for Riggins, Inc. Identify whether each variance is favorable or unfavorable. (a) Materials Price Variance enter amount F or U (b) Materials Quantity Variance enter amount F or U (c) Labor Price Variance enter amount F or U
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.
Riggins, Inc. manufactures one product called tybos. The company uses a
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Standard Quantity
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Standard Price
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||||
|---|---|---|---|---|---|
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Direct materials
|
2.5 pounds | $3 per pound | |||
|
Direct labor
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0.6 hours | $10 per hour |
During March 2022, the following activity was recorded by the company relating to the production of tybos:
| 1. | The company produced 9,000 units during the month. | ||
| 2. | A total of 24,000 pounds of materials were purchased at a cost of $66,000. | ||
| 3. | A total of 24,000 pounds of materials were used in production. | ||
| 4. | 5,000 hours of labor were incurred during the month at a total wage cost of $55,000. |
Calculate the following variances for March for Riggins, Inc. Identify whether each variance is favorable or unfavorable.
|
(a)
|
Materials Price Variance
|
enter amount | F or U | |||
|---|---|---|---|---|---|---|
|
(b)
|
Materials Quantity Variance
|
enter amount | F or U | |||
|
(c)
|
Labor Price Variance
|
enter amount | F or U | |||
|
(d)
|
Labor Quantity Variance
|
enter amount | F or U |
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