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Modules Week 2 - Module Week 2 Cost Accounting Page |1...

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900 lbs turing overhead price variance using direct labor hours Favorable Module Week 2 Cost Accounting Pa g e | 1 Create Budgets 100 lbs steel in inventory Expects to produce 10,000 whistles in March .10 lb steel per whistle 500 lbs of steel desired ending inventory $5.00 per lb of steel Expected sales 10,000 x .1 lb quantity per whistle = 1000 lbs required for whistle Less beginning inventory = 100 900 lbs Add desired inventory 500 lbs 1400 lbs expected to purchase 1400 lbs x $5.00 per lb = $7,000 will be spent on steel in March Example
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Module Week 2 Cost Accounting Pa g e | 2
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Module Week 2 Cost Accounting Pa g e | 3 Direct labor hours budgeted 10,000 x .05 = 500 hrs X standard rate $12 = $6,000 direct labour budgeted Example
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Module Week 2 Cost Accounting Pa g e | 4 Compute Standard Cost Materials purchased = 18,000 yards Total cost of materials 175,000/materials purchased 18,000 = 9.72222222
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Module Week 2 Cost Accounting Pa g e | 5 Standard price rate per unit = $10 Direct material Price Variance = Actual Quantity Purchased x (Actual Price – Standard Price) Direct material price variance = 18,000 x (9.222222- 10) = -5000 FAVORABLE Example
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