## Costing:

Costing is the estimation and predetermined cost for the manufacturing of the single units. The Cost for the product may be direct or indirect. The Cost for the production is included in the marketing price for the commodities.

1. Journal Entries for the Labor Cost:

 Particular L/F Debit Credit Factory labor Debited - 25888 Labor rate variance - 1588 - wages payable Credited - - 24300 (Being pay roll for work in Process) - -

Working Note:

Calculation for labor rate variance:

Here,

{eq}\begin {align*} {\rm{LRV}}& = {\rm{Labour}}{\rm{Rate}}{\rm{Variance}}\\ {\rm{AC}}& = {\rm{Actual}}{\rm{Cost}}\\ {\rm{SC}} &= {\rm{Standard}}{\rm{Cost}} \end{align*} {/eq}

{eq}\begin {align*} &{\rm{LRV}} = {\rm{SC}} - {\rm{AC}}\\ &{\rm{LRV}} = 25888 - 24300\\ &{\rm{LRV}} = 1588 \end{align*} {/eq}

Journal Entries for the Labor Cost:

 Particular L/F Debit Credit Work in Process - 26903 Labor efficiency variance - - 1015 Factory Labor credited - - 25888 (Being wages paid) - -

Working Note:

Calculation for work in process:

{eq}\begin {align*} &{\rm {= Standard}}{\rm{Hours}} \times \frac{{{\rm{Standard}}\;{\rm{Cost}}}}{{{\rm{Assigned}}\;{\rm{Hours}}}}\\ &= 4770 \times \frac{{25888}}{{4590}}\\ &= 26903 \end{align*} {/eq}

Calculation for labor Efficiency variance:

{eq}\begin{align*} &= {\rm{Actual}}{\rm{cost}} - {\rm{Standardost}}\\ &= 26903 - 25888\\ &= 1015 \end{align*} {/eq}