At the beginning of the year, Conway Manufacturing had the following account balances: Work−in−Process Inventory 2,000 Finished Goods Inventory 8,000 Manufacturing Overhead 0 Cost of Goods Sold 0 Sales Revenue 0 The following additional details are provided for the year: Direct materials placed in production $81,800 Direct labor incurred 191,200 Manufacturing overhead incurred 300,000 Manufacturing overhead allocated to production 295,700 Cost of jobs completed and transferred 500,200 The ending balance in the Work−in−Process Inventory account is a ________.
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
At the beginning of the year, Conway Manufacturing had the following account balances:
Work−in−Process
Inventory
|
2,000 |
Finished Goods Inventory
|
8,000 |
Manufacturing
|
0 |
Cost of Goods Sold
|
0 |
Sales Revenue
|
0 |
The following additional details are provided for the year:
|
Direct materials placed in production |
$81,800 |
|
Direct labor incurred |
191,200 |
|
Manufacturing overhead incurred |
300,000 |
|
Manufacturing overhead allocated to production |
295,700 |
|
Cost of jobs completed and transferred |
500,200 |
The ending balance in the Work−in−Process Inventory account is a ________.
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