Fee Co. had a production run of 8,000 pairs of slacks during the last week of June, at the following cost per pair. Materials P 50.00 Labor 40.00 Factory overhead (includes P7.00 allowance for spoiled work) 30.00 Final inspection revealed 600 pairs not meeting quality standards, salable as seconds at P40.00 per pair. Required: 1. Prepare the journal entries assuming the loss is charged to the production run. 2. Prepare the journal entries assuming the loss is to be charged to all production run.
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.
Fee Co. had a production run of 8,000 pairs of slacks during the last week of June, at the following cost per pair.
Materials
P 50.00
Labor
40.00
Factory overhead (includes P7.00 allowance for spoiled work)
30.00
Final inspection revealed 600 pairs not meeting quality standards, salable as seconds at P40.00 per pair.
Required:
1. Prepare the
2. Prepare the journal entries assuming the loss is to be charged to all production run.
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