Breakaway Proprietary Limited’s beginning and ending inventories for the month of January were as follows: January 1 January 31 Direct Materials R80 000 R78 000 Work in Process R155 000 R166 000 Finished Goods R90 000 R88 000 Production data for the month follows: Direct labour cost incurred R215 000 Actual manufacturing overhead cost incurred R145 000 Direct materials purchases R160 000 Breakaway applies the manufacturing overhead cost to jobs at the rate of 75% of the direct labour cost incurred. This rate has been used for many years. The company does not close the under- or over applied manufacturing overhead to the Cost of Goods Sold until the end of the year. Calculate the cost of goods manufactured for January
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.
Breakaway Proprietary Limited’s beginning and ending inventories for the month of January were as follows: January 1 January 31 Direct Materials R80 000 R78 000 Work in Process R155 000 R166 000 Finished Goods R90 000 R88 000 Production data for the month follows: Direct labour cost incurred R215 000 Actual
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