Product and Period Costs

A business needs to separate period and product cost as product costs are included as part of the inventory until the product is sold, whereas period costs are treated as an expense in the income statement in the period in which they are incurred.

Product and Period Costs November 6th, 2016Team
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Equivalent Units FIFO method

The equivalent units FIFO method is used in process costing to express partially completed units of product in terms of finished units.

The objective of using equivalent units is to be able to allocate production costs to completed and partially completed units.

Equivalent Units FIFO method November 6th, 2016Team
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Equivalent Units of Production

The equivalent units of production method is used in process costing to express partially completed units of product in terms of finished units.

The objective of using equivalent units is to be able to allocate production costs to completed and partially completed units.

Equivalent Units of Production November 6th, 2016Team
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Manufacturing Overhead

Manufacturing overheads, refer to all the indirect costs incurred in the factory necessary to run the manufacturing operation while the product is being produced.

Manufacturing Overhead November 6th, 2016Team
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Fixed Overhead Variance

In a standard costing accounting system, fixed manufacturing overhead has two main variances budget and volume. Fixed overheads are those costs which do not vary in response to the level of production output. To operate a standard costing system and allocate fixed overhead, the business must first decide on the basis of allocation, and calculate the standard fixed overhead allocation rate.

Fixed Overhead Variance November 6th, 2016Team
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Variable Overhead Variance

In a standard costing accounting system, variable manufacturing overhead has two main variances rate and efficiency. Variable overheads are those costs which vary in response to the level of production output but which cannot be attributed to individual units of production. To operate a standard costing system and allocate variable overhead, the business must first decide on the basis of allocation.

Variable Overhead Variance November 6th, 2016Team
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Direct Labor Variance Journal

In a standard costing accounting system, direct labor has two main variances price and efficiency. Unlike direct materials, direct labor is used at the same time as it is purchased, and therefore the price and efficiency variances occur at the same time on the same production run, and a single journal is needed post the variances together with the standard and actual cost to the accounting system.

Direct Labor Variance Journal November 6th, 2016Team
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Direct Labor Efficiency Variance

The direct labor efficiency variance is one of the main variances used in standard costing and represents the difference between the standard quantity of labor and the actual quantity of labor used, multiplied by the standard labor rate.

Direct Labor Efficiency Variance November 6th, 2016Team
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Direct Labor Price Variance

The direct labor price variance sometimes referred to as the direct labour rate variance, is one of the main variances used in standard costing and represents the difference between the standard labor rate and the actual labor rate, multiplied by the number of units of labor used.

Direct Labor Price Variance November 6th, 2016Team
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Direct Materials Quantity Variance

The direct material quantity variance is one of the main variances used in standard costing and represents the difference between the standard material quantity and the actual material quantity, multiplied by the standard price per unit.

Direct Materials Quantity Variance November 6th, 2016Team
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Direct Materials Price Variance

The direct materials price variance is one of the main variances used in standard costing and represents the difference between the standard material unit price and the actual material unit price, multiplied by the quantity of units used.

Direct Materials Price Variance November 17th, 2016Team
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