At the beginning of the year, Craig Company had the following standard cost sheet for one of its plastic products: Direct materials (5 lbs. @ $4.00) $20.00 Direct labor (2 hrs. @ $15.00) 30.00 Standard prime cost per unit $50.00 The actual results for the year are as follows: Units produced: 490,000. Materials purchased: 3,430,000 pounds @ $5.00. Materials used: 3,087,000 pounds. Direct labor: 1,078,000 hours @ $11.88. Required: 1. Compute price and usage variances for materials. Enter amounts as positive numbers and select Favorable or Unfavorable. Material price variance $fill in the blank 1 Material usage variance $fill in the blank 3 2. Compute the labor rate and labor efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable. Labor rate variance $fill in the blank 5 Labor efficiency variance $fill in the blank 7
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.
At the beginning of the year, Craig Company had the following
| Direct materials (5 lbs. @ $4.00) | $20.00 |
| Direct labor (2 hrs. @ $15.00) | 30.00 |
| Standard prime cost per unit | $50.00 |
The actual results for the year are as follows:
- Units produced: 490,000.
- Materials purchased: 3,430,000 pounds @ $5.00.
- Materials used: 3,087,000 pounds.
- Direct labor: 1,078,000 hours @ $11.88.
Required:
1. Compute price and usage variances for materials. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Material price variance | $fill in the blank 1 | |
| Material usage variance | $fill in the blank 3 |
2. Compute the labor rate and labor efficiency variances. Enter amounts as positive numbers and select Favorable or Unfavorable.
| Labor rate variance | $fill in the blank 5 | |
| Labor efficiency variance | $fill in the blank 7 |
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