ABC Company received an order to make school uniforms and uses the job order costing system. The following transaction occurred during 2021 relating to Job U-101: Purchased raw materials at a cost of P2,000,000 Direct materials used for 1,400,000 Raw materials were used as indirect materials, P200,000 Direct labor hours consumed for P1,500,000 on the job, which was fully paid. Indirect labor hours used costing P500,000 Other indirect costs accrued were $1,250,000 Manufacturing overhead equal to 100% of direct labor was charged. The cost of U-101 of 24,400,000 (direct materials of P1,400,000 + direct labor cost of P1,500,000 + applied overhead of P1,500,000) was transferred to finished goods on completion. Revenue is recorded at P5,720,000 (P4,400,000 x 130%) Actual manufacturing overheads were P1,950,000 (indirect materials costing P200,000+ indirect labor costing P500,000 and other overheads of P1,250,000). Applied manufacturing overheads were P1,500,000. The manufacturing overheads worth P450,000 were under-applied and are taken to the cost of goods sold or income statement. Required: Journal entries to record the above transactions
ABC Company received an order to make school uniforms and uses the job order costing system. The following transaction occurred during 2021 relating to Job U-101: Purchased raw materials at a cost of P2,000,000 Direct materials used for 1,400,000 Raw materials were used as indirect materials, P200,000 Direct labor hours consumed for P1,500,000 on the job, which was fully paid. Indirect labor hours used costing P500,000 Other indirect costs accrued were $1,250,000 Manufacturing overhead equal to 100% of direct labor was charged. The cost of U-101 of 24,400,000 (direct materials of P1,400,000 + direct labor cost of P1,500,000 + applied overhead of P1,500,000) was transferred to finished goods on completion. Revenue is recorded at P5,720,000 (P4,400,000 x 130%) Actual manufacturing overheads were P1,950,000 (indirect materials costing P200,000+ indirect labor costing P500,000 and other overheads of P1,250,000). Applied manufacturing overheads were P1,500,000. The manufacturing overheads worth P450,000 were under-applied and are taken to the cost of goods sold or income statement. Required: Journal entries to record the above transactions
Chapter1: Financial Statements And Business Decisions
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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.
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ABC Company received an order to make school uniforms and uses the
The following transaction occurred during 2021 relating to Job U-101:
- Purchased raw materials at a cost of P2,000,000
- Direct materials used for 1,400,000
- Raw materials were used as indirect materials, P200,000
- Direct labor hours consumed for P1,500,000 on the job, which was fully paid.
- Indirect labor hours used costing P500,000
- Other indirect costs accrued were $1,250,000
- Manufacturing overhead equal to 100% of direct labor was charged.
- The cost of U-101 of 24,400,000 (direct materials of P1,400,000 + direct labor cost of P1,500,000 + applied overhead of P1,500,000) was transferred to finished goods on completion.
- Revenue is recorded at P5,720,000 (P4,400,000 x 130%)
- Actual manufacturing
overheads were P1,950,000 (indirect materials costing P200,000+ indirect labor costing P500,000 and other overheads of P1,250,000). Applied manufacturing overheads were P1,500,000. The manufacturing overheads worth P450,000 were under-applied and are taken to the cost of goods sold or income statement.
Required:
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