Holiday Company produces dog food. All direct materials are entered at the beginning of the process. Some shrinkage occurs during the production process, but management considers any shrinkage of up to 5% of started during the month to be normal. May 2019 data are as follows: Beginning WIP (45% complete) 36,000 pounds Started during the month 120,000 pounds Transferred to FG 126,000 pounds Ending WIP (70% incomplete) 22,000 pounds Beginning work in process: Materials – P24,000; Conversion – P9,800. Current period costs: Materials – P86,640; Conversion – P54,144. The company uses FIFO Method. How much is the cost of transferred out?
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.
Holiday Company produces dog food. All direct materials are entered at the beginning of the process. Some shrinkage occurs during the production process, but management considers any shrinkage of up to 5% of started during the month to be normal. May 2019 data are as follows:
Beginning WIP (45% complete) 36,000 pounds
Started during the month 120,000 pounds
Transferred to FG 126,000 pounds
Ending WIP (70% incomplete) 22,000 pounds
Beginning work in process: Materials – P24,000; Conversion – P9,800. Current period costs: Materials – P86,640; Conversion – P54,144. The company uses FIFO Method.
How much is the cost of transferred out?
Step by step
Solved in 2 steps
