Ehrlich Inc. makes a product with the following standard costs for direct material and direct labor: Quantity/Hours Price /Rate Per Unit Direct Material 6.00 lbs $ 3.80 Direct Labor 1.5 hrs $ 16.00
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.
![Ehrlich Inc. makes a product with the following standard costs for direct
material and direct labor:
Quantity/Hours
Price /Rate
Per Unit
Direct Material
6.00 lbs
$ 3.80
Direct Labor
1.5 hrs
$ 16.00
During the most recent month, 6,300 units were produced. The costs associated
with the month's production of this product were as follows:
Quantity/Hours
Price /Rate
Materials purchased
42,000 lbs
$3.00/per lbs.
Materials used in production
32,000 lbs
Direct labor
9,950 hrs
$14.50/per hr.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48f817eb-8e14-4876-86c5-e7ddf5bfc223%2F3e2c8b2e-216b-4402-b898-f49e3cec9946%2F553qiev_processed.jpeg&w=3840&q=75)
![Required:
Part 1 - Calculate the standard cost expected to make 6,500 units of product
Part 2 - Compute applicable Variances...
1. Material Price Variance
2. Material Quantity Variance
3. Labor Rate Variance
4. Labor Efficiency Variance
5. Labor Spending Variance
Part 3 - Prepare applicable Journal Entries to Record...
1. the purchase of materials on account for the month.
2. the use of materials for the month.
3. the direct labor cost for the month.
4. the closing of variance accounts at the end of the month](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48f817eb-8e14-4876-86c5-e7ddf5bfc223%2F3e2c8b2e-216b-4402-b898-f49e3cec9946%2F9xr5pq9_processed.jpeg&w=3840&q=75)
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