Road Gripper Tire Co. manufactures automobile tires. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 4,160 tires were as follows: Standard Costs Actual Costs Direct materials 100,000 lbs. at $6.40 101,000 lbs. at $6.50 Direct labor 2,080 hrs. at $15.75 2,000 hrs. at $15.40 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 2,000 direct labor hrs.: Variable cost, $4.00 $8,200 variable cost Fixed cost, $6.00 $12,000 fixed cost Each tire requires 0.5 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. Price variance $ Quantity variance $ Total direct materials cost variance $ 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. Rate variance $ Time variance $ Total direct labor cost variance $ 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 $ Fixed factory overhead volume variance $ Total factory 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.
Road Gripper Tire Co. manufactures automobile tires.
| Standard Costs | Actual Costs | ||
| Direct materials | 100,000 lbs. at $6.40 | 101,000 lbs. at $6.50 | |
| Direct labor | 2,080 hrs. at $15.75 | 2,000 hrs. at $15.40 | |
| Factory overhead | Rates per direct labor hr., | ||
| based on 100% of normal | |||
| capacity of 2,000 direct | |||
| labor hrs.: | |||
| Variable cost, $4.00 | $8,200 variable cost | ||
| Fixed cost, $6.00 | $12,000 fixed cost |
Each tire requires 0.5 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.
| Price variance | $ | |
| Quantity variance | $ | |
| Total direct materials cost variance | $ |
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.
| Rate variance | $ | |
| Time variance | $ | |
| Total direct labor cost variance | $ |
c. Determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total
| Variable factory overhead controllable variance | $ | |
| Fixed factory overhead volume variance | $ | |
| Total factory overhead cost variance | $ |
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