(Appendix 10B)The Lahn Company Produces and Sells a Single Product

question 113

Essay

(Appendix 10B)The Lahn Company produces and sells a single product.Standards have been established for the product as follows:
Actual cost and usage figures for the past month follow:
Required:
Prepare journal entries to record:
a)The purchase of raw materials.
b)The usage of raw materials in production.
c)The incurrence of direct labour cost.

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Definitions:

Average Total Costs

The total cost of production (including both fixed and variable costs) divided by the number of units produced, representing the average expense per unit.

Marginal Cost

The price associated with the creation of one more unit of a product or service.

Average Total Cost

The per-unit cost of production, calculated by dividing the total cost of production by the quantity of output produced.

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.