Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 10,000 hours for production: Variable overhead cost: Indirect factory labor $24,000 Power and light 7,700 Indirect materials 11,000 Total variable overhead cost $ 42,700 Fixed overhead cost: Supervisory salaries $46,280 Depreciation of plant and equipment 12,180 Insurance and property taxes 22,740 Total fixed overhead cost 81,200 Total factory overhead cost $123,900 Tannin has available 14,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 9,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows: Actual variable factory overhead cost: Indirect factory labor $21,060 Power and light 6,810 Indirect materials 10,400 Total variable cost $38,270 Construct a factory overhead cost variance report for the Trim Department for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank. Round your interim computations to the nearest cent, if required.
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.
Tannin Products Inc. prepared the following
| Variable overhead cost: | ||
| Indirect factory labor | $24,000 | |
| Power and light | 7,700 | |
| Indirect materials | 11,000 | |
| Total variable overhead cost | $ 42,700 | |
| Fixed overhead cost: | ||
| Supervisory salaries | $46,280 | |
| |
12,180 | |
| Insurance and property taxes | 22,740 | |
| Total fixed overhead cost | 81,200 | |
| Total factory overhead cost | $123,900 |
Tannin has available 14,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 9,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:
| Actual variable factory overhead cost: | |
| Indirect factory labor | $21,060 |
| Power and light | 6,810 |
| Indirect materials | 10,400 |
| Total variable cost | $38,270 |
Construct a factory overhead cost variance report for the Trim Department for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank. Round your interim computations to the nearest cent, if required.
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