Graham Petroleum produces oil. On May 1, it had no work-in-process inventory. It started production of 205 million barrels of oil in May and shipped 175 million barrels in the pipeline. The costs of the resources used by Graham in May consist of the following: Materials $ 1,981 million Conversion costs (labor and overhead) $ 3,230 million Required: The production supervisor estimates that the ending work in process is 60 percent complete on May 31. Compute the cost of oil shipped in the pipeline and the amount in work-in-process ending inventory as of May 31. (Do not round intermediate calculations. Enter your answers in millions. For example, enter "1" instead of "1,000,000".)
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.
Graham Petroleum produces oil. On May 1, it had no work-in-process inventory. It started production of 205 million barrels of oil in May and shipped 175 million barrels in the pipeline. The costs of the resources used by Graham in May consist of the following:
| Materials | $ | 1,981 | million | |
| Conversion costs (labor and |
$ | 3,230 | million | |
Required:
The production supervisor estimates that the ending work in process is 60 percent complete on May 31. Compute the cost of oil shipped in the pipeline and the amount in work-in-process ending inventory as of May 31. (Do not round intermediate calculations. Enter your answers in millions. For example, enter "1" instead of "1,000,000".)
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