Cedargrove Cider processes and bottles apple cider for sale through retail and big box grocery outlets. It had no work in process on May 31 in its only inventory account. The company started 20,200 cases during June. On June 30, work in process is 5,100 cases. The production supervisor estimates that the ending work-in-process inventory is 60 percent complete. Cost records at Cedargrove recorded June production costs of $94,850 in materials cost and $118,500 in conversion costs. All production is sold as it is produced. Required: Compute cost of goods sold for June. What is the value of work-in-process inventory on June 30? The president tells the controller that the company has already met its income target for the quarter, which ends on June 30, but whether the target can be met next quarter is in doubt. The president asks the controller to change the production manager’s estimate about the ending work-in-process inventory to increase the probability the company can meet the next quarter's income target. To comply with the president’s request, would the controller raise or lower the estimated percentage complete from the 60 percent estimate of the production supervisor? What should the controller do?
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.
Cedargrove Cider processes and bottles apple cider for sale through retail and big box grocery outlets. It had no work in process on May 31 in its only inventory account. The company started 20,200 cases during June. On June 30, work in process is 5,100 cases. The production supervisor estimates that the ending work-in-process inventory is 60 percent complete. Cost records at Cedargrove recorded June production costs of $94,850 in materials cost and $118,500 in conversion costs. All production is sold as it is produced.
Required:
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Compute cost of goods sold for June.
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What is the value of work-in-process inventory on June 30?
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The president tells the controller that the company has already met its income target for the quarter, which ends on June 30, but whether the target can be met next quarter is in doubt. The president asks the controller to change the production manager’s estimate about the ending work-in-process inventory to increase the probability the company can meet the next quarter's income target.
- To comply with the president’s request, would the controller raise or lower the estimated percentage complete from the 60 percent estimate of the production supervisor?
- What should the controller do?
Compute cost of goods sold for June.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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What is the value of work-in-process inventory on June 30?
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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