1. Cost of raw materials $132,000 2. Indirect materials $31,000 3. Indirect labor cost $19,000 4. Cost of goods manufactured $503,000 5. Unadjusted cost of goods sold $477,500 Questions: 1.If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year? 2. Was manufacturing overhead underapplied or overapplied? By how much? 3. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $10,750 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
|
1. Cost of raw materials |
$132,000 |
|
2. Indirect materials |
$31,000 |
|
3. Indirect labor cost |
$19,000 |
|
4. Cost of goods manufactured |
$503,000 |
|
5. Unadjusted cost of goods sold |
$477,500 |
Questions:
1.If
2. Was manufacturing overhead underapplied or overapplied? By how much?
3. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $10,750 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?
The overhead is applied to the production on the basis of predetermined overhead rate.
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