PROBLEM #1 Xavier Company produces a single product. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The standard costs for one unit of product are as follows: Direct material: 6 ounces at $0.50 per ounce . . . . . . . . . . . . . . . . . . $3 Direct labor: 1.8 hours at $10 per hour . . . . . . . . . . . . . . . . . . . . . . . 18 Variable manufacturing overhead: 1.8 hours at $5 per hour . . . . . . . 9 Total standard variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . $30 During June, 2,000 units were produced. The costs associated with June’s operations were as follows: Material purchased: 18,000 ounces at $0.60 per ounce . . . . . . . $10,800 Material used in production: 14,000 ounces . . . . . . . . . . . . . . . . . — Direct labor: 4,000 hours at $9.75 per hour . . . . . . . . . . . . . . . . . $39,000 Variable manufacturing overhead costs incurred . . . . . . . . . . . . . $20,800 Required: Compute the direct materials, direct labor, and variable manufacturing overhead variances.
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.
PROBLEM #1
Xavier Company produces a single product. Variable manufacturing
Direct material: 6 ounces at $0.50 per ounce . . . . . . . . . . . . . . . . . . $3
Direct labor: 1.8 hours at $10 per hour . . . . . . . . . . . . . . . . . . . . . . . 18
Variable manufacturing overhead: 1.8 hours at $5 per hour . . . . . . . 9
Total standard variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . $30
During June, 2,000 units were produced. The costs associated with June’s operations were as follows:
Material purchased: 18,000 ounces at $0.60 per ounce . . . . . . . $10,800
Material used in production: 14,000 ounces . . . . . . . . . . . . . . . . . —
Direct labor: 4,000 hours at $9.75 per hour . . . . . . . . . . . . . . . . . $39,000
Variable
Required:
Compute the direct materials, direct labor, and variable manufacturing overhead variances.
PROBLEM #2
NovexCompany keeps careful track of the time to complete customer orders. During the most recent quarter, the following average times were recorded for each unit or order:
Days
Wait time . . . . . . . . . . . . 17.0
Inspection time . . . . . . . . 0.4
Process time . . . . . . . . . .2.0
Move time . . . . . . . . . . . .0.6
Queue time . . . . . . . . . . .5.0
Goods are shipped as soon as production is completed.
Required:
- Compute the throughput time.
- Compute the manufacturing cycle efficiency (MCE).
- What percentage of the production time is spent in non-value-added activities?
- Compute the delivery cycle time.
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