Assume that a company has two cost drivers—number of textbooks and number of instructors. The planned number of textbooks and instructors were 5 and 100, respectively. The actual number of textbooks and instructors were 6 and 110, respectively. One of the company’s expenses is influenced by both cost drivers. Its cost formulas are $50 per textbook and $5 per instructor. The total actual amount of this expense is $880. The spending variance for this expense would be:
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.
Assume that a company has two cost drivers—number of textbooks and number of instructors. The planned number of textbooks and instructors were 5 and 100, respectively. The actual number of textbooks and instructors were 6 and 110, respectively. One of the company’s expenses is influenced by both cost drivers. Its cost formulas are $50 per textbook and $5 per instructor. The total actual amount of this expense is $880. The spending variance for this expense would be:
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