$46,830 $189,515 $16,487 Direct materials $16,843 $13,541 $19,846 Direct labor $185,961 $64,891 $168,543 Applied manufacturing overhead $89,652 $78,943 $98,462 Ending balance $339,286 $346,890 $303
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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.
Rohan Outfitters manufacturers durable work clothes and boots. During the month of June they worked on the following three jobs:
Job A | Job B | Job C | |
Beginning balance | $46,830 | $189,515 | $16,487 |
Direct materials | $16,843 | $13,541 | $19,846 |
Direct labor | $185,961 | $64,891 | $168,543 |
Applied manufacturing |
$89,652 | $78,943 | $98,462 |
Ending balance | $339,286 | $346,890 | $303,338 |
The status of each Job at the end of the month is, as follows: Job A remained in process, Job B was completed but unsold, Job C was sold. The manufacturing overhead reported for each job was applied using an ABC allocation method. The actual
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- Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $254, 610 and total machine hours at 62, 100. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Total Direct materials used $ 11, 200 $ 7,700 $ 5,400 $ 24, 300 Direct labor $ 17, 400 $ 5,100 $ 4,900 $ 27,400 Machine hours 1, 300 hours 2,900 hours 900 hours 5, 100 hours Job 101 was completed and sold for $51, 900. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $19,610. Required: 1. Calculate the predetermined overhead rate. Note: Round your answer to 2 decimal places.Journal Entries in Job Cost Accounting Process Practice Problem 5: During the month of July, Creative Printers purchased $ 25,000 of materials on account. The company sent direct materials from the storeroom to jobs as follows: $ 9,000 to Job No. 106, and $ 14,000 to Job No. 107. The company also sent indirect materials of $ 1,000 to each job. The company assigned production-related labor costs to jobs (direct labor) and to Overhead as follows: $4,000 to Job No. 106, $ 16,000 to Job No. 107, and indirect labor of $2,000 to Job No. 106. Pass the jourmal entries in the books of Creative printers for material, labour and overheads.Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $234,840 and total machine hours at 61,800. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Total Direct materials used $ 11,900 $ 7,900 $ 5,200 $ 25,000 Direct labor $ 17,300 $ 5,000 $ 5,400 $ 27,700 Machine hours 1,600 hours 2,500 hours 800 hours 4,900 hours Job 101 was completed and sold for $50,800. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $14,020. Required: 1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the…
- Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $257,070 and total machine hours at 62,700. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Direct materials used Direct labor Machine hours Job 101 11,600 $ $ 16,900 1,800 hours Job 102 $ 8,700 $ 6,200 2,000 hours Job 103 $ 5,900 $ 4,500 1,100 hours Total $ 26,200 $ 27,600 4,900 hours Job 101 was completed and sold for $50,800. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $15,690. Required: 1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the sales revenue and…Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated Its total manufacturing overhead cost at $237,500 and total machine hours at 62,500. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Direct materials used Direct labor Machine hours Job 1011 $ 11,600 $ 18,000 1,700 hours 1. Predetermined Overhead Rate 2. Total Applied Manufacturing Overhead 3. Ending Work in Process Inventory 4. Gross profit Job 102 $ 8,100 $ 5,700 5-a. Balance 5-b. Is it over- or underapplied? 2,700 hours Job 103 $5,500 $ 5,100 Job 101 was completed and sold for $50,400. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $19,800. 1,100 hours Total Required: 1. Calculate the predetermined…Applying Overhead to Jobs, Costing Jobs Jagjit Company designs and builds retaining walls for individual customers. On August 1, there were two jobs in process: Job 93 with a beginning balance of $8,750 and Job 94 with a beginning balance of $7,300. Jagjit applies overhead at the rate of $8 per direct labor hour. Direct labor wages average $18 per hour. Data on August costs for all jobs are as follows: Job 93 Job 94 Job 95 Job 96 Direct materials $ 950 $4,500 $3,300 $1,300 Direct labor cost 2,160 5,400 2,610 900 During August, Jobs 95 and 96 were started. Job 93 was completed on August 17, and the client was billed at cost plus 40%. All other jobs remained in process.
- On March 1 a dressmaker starts work on three custom-designed wedding dresses. The company uses joborder costing and applies overhead to each job (dress) at the rate of 40% of direct materials costs. Duringthe month, the jobs used direct materials as shown below. Compute the amount of overhead applied toeach of the three jobs.Job 1 Job 2 Job 3Direct materials used . $5,000 $7,000 $1,500Pro-Craft Company computed the following activity rates to allocate overhead cost for the year. Activity Activity Rate Materials handling $ 59 per materials requisition Quality inspection $ 49 per inspection Utilities $ 6 per machine hour During January, the company produced the following two jobs. Allocate overhead cost to each job using the activity rates. Activity Cost Driver Activity Usage Job A Job B Materials requisitions 4 2 Inspections 7 3 Machine hours 345 245Ensign Landscape Design designs landscape plans and plants the material for clients. On April 1, there were three jobs in process, Jobs 39, 40, and 41. During April, two more jobs were started, Jobs 42 and 43. By April 30, Jobs 40, 41, and 43 were completed and sold. The following data were gathered: Job 39 Job 40 Job 41 Job 42 Job 43 Balance, April 1 $540 $3,410 $2,980 — — Direct materials 680 530 360 $3,500 $6,950 Direct labor 480 580 470 2,520 3,000 Overhead is applied at the rate of 110% of direct labor cost. Jobs are sold at cost plus 30%. Selling and administrative expenses for April totaled $4,550. (Round all amounts to the nearest dollar.) Required: 1. Prepare job-order cost sheets for each job as of April 30. 2. Calculate the ending balance in Work in Process (as of April 30) and Cost of Goods Sold for April. 3. Construct an income statement for Ensign Landscape Design for the month of April. Refer to the list below for the exact wording of…
- Applying Overhead to Jobs, Costing Jobs Jagjit Company designs and builds retaining walls for individual customers. On August 1, there were two jobs in process: Job 93 with a beginning balance of $8,750 and Job 94 with a beginning balance of $7,300. Jagjit applies overhead at the rate of $8 per direct labor hour. Direct labor wages average $18 per hour. Data on August costs for all jobs are as follows: Job 93 Job 94 Job 95 Job 96 Direct materials $950 $4,500 $3,300 $1,300 Direct labor cost 2,160 5,400 2,610 900 During August, Jobs 95 and 96 were started. Job 93 was completed on August 17, and the client was billed at cost plus 40%. All other jobs remained in process. Required: 1. Calculate the number of direct labor hours that were worked on each job in August. Job 93 DLH Job 94 DLH Job 95 DLH Job 96 DLH 2. Calculate the overhead applied to each job during the month of August. Job 93 $ Job 94 $ Job 95 $ Job 96 $ Feedback 1.…On March 1 a dressmaker starts work on three custom-designed wedding dresses. The company uses job order costing and applies overhead to each job (dress) at the rate of 44% of direct materials costs. During the month, the jobs used direct materials as shown below. Compute the amount of overhead applied to each of the three jobs. Direct materials used Job 1 Job 2 Job 3 Overhead Applied Job 1 Job 2 Job 3 $6,000 $8,000 $2,500Expedition Company worked on five jobs during May: Jobs A10, B20, C30, D40, and E50. At the end of May, the job cost sheets for these five jobs contained the following data: Beginning balance Charged to the jobs during May: Direct materials Direct labor Manufacturing overhead applied Units completed Units sold during May Job A10 $ 103 $ 140 $ 120 $147 150 0 1. Cost of goods sold for May 2. Finished goods inventory at the end of May 3. Work in process inventory at the end of May Job B20 $ 120 $ 120 $ 130 $ 160 0 0 Job C30 $ 178 $ 170 $95 $107 65 65 Job D40 $132 $ 125 $150 $168 0 Required: 1. What is the cost of goods sold for May? Note: Round "Unit product cost" to 2 decimal places and final answer to nearest dollar amount. 2. What is the total value of the finished goods inventory at the end of May? Note: Round "Unit product cost" to 2 decimal places and final answer to nearest dollar amount. 3. What is the total value of the work in process inventory at the end of May? Job E50 $ 200…