Total Material Variance and the breakdown to the Material Price Variance, Material Quantity Variance. For the price and quantity variances discuss at least two possible reasons for the variance. Total Labor Variance and the breakdown to the Direct Labor Rate Variance, Direct Labor Efficiency Variance Total Labor Variance. For the rate and efficiency variances discuss at least two possible reasons for the 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.
Alladdin Company EarPlug Production.
Direct materials – Memory Foam: 6 pieces per EarPlug at $0.50 per piece
Direct labor: 1.3 hours per EarPlug at $8 per hour
Variable manufacturing overhead: 1.3 hours per EarPlug at $4 per hour
Fixed manufacturing overhead: 1.3 hours per Earplug at $6 per hour
During January, the company produced 3,000 CrittEars. The fixed overhead expense budget was $24,180.
Actual costs in January were as follows:
Direct materials: 25,000 pieces purchased at a cost of $0.48 per piece
Direct labor: 4,000 hours were worked at a cost of $36,000
Variable manufacturing overhead: Actual cost was $17,000
Fixed manufacturing overhead: Actual cost was $25,000
Answer the below:
- Total Material Variance and the breakdown to the Material Price Variance, Material Quantity Variance. For the price and quantity variances discuss at least two possible reasons for the variance.
- Total Labor Variance and the breakdown to the Direct Labor Rate Variance, Direct Labor Efficiency Variance Total Labor Variance. For the rate and efficiency variances discuss at least two possible reasons for the variance.
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