Required Calculate the efficiency variance for variable setup overhead costs. Calculate the rate variance for variable setup overhead costs. Calculate the flexible-budget variance for variable setup overhead costs. Calculate the rate variance for fixed setup overhead costs. Calculate the production-volume variance for fixed setup overhead costs.
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.
Question 2.4
OG Anunoby Corporation produces a special line of basketball hoops in batches. To manufacture a batch of the basketball hoops OG Anunoby Corporation must setup the machines and moulds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and moulds for different styles of basketball hoops
Setup
|
|
Static-budget Amounts |
Actual Amounts |
|
Basketball hoops produced and sold |
30,000 |
28,000 |
|
Batch size (number of units per batch) |
200 |
250 |
|
Setup hours per batch |
5 |
4 |
|
Variable overhead cost per setup hour |
$10 |
$9 |
|
Total fixed setup overhead costs |
$22,500 |
$21,000 |
Required
- Calculate the efficiency variance for variable setup overhead costs.
- Calculate the rate variance for variable setup overhead costs.
- Calculate the flexible-
budget variance for variable setup overhead costs. - Calculate the rate variance for fixed setup overhead costs.
- Calculate the production-volume variance for fixed setup overhead costs.
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