Peter Senen Manufacturing Company has just completed its production activities for February 2019. The production manager furnished you their data for this month: Department X Department Y Quantity units: In process, February 1 16,000 10,000 Stage of completion 4/5 40% Started in process 64,000 Received from prior department 70,000 In process, February 28 ? 12,000 Stage of completion 2/5 2/3 Costs data: In process, February 1 $21,020 $20,300 Current costs Materials 28,350 46,800 Labor 15,300 25,200 Manufacturing Overhead 9,180 14,400 In Department X, material application is described to you as follows: 10% is applied at the start of the process; 25% when the process reaches the mid-point; and the remainder, when the process reaches 85% completion. Labor and Overhead are applied evenly throughout the process. In Department Y, the application of material is described as follows: 20% when the process is ‘1/4 completed; 30% when the process is ‘1/2 completed and the balance, at the end of the process. Both departments use the FIFO method. Required: a. The unit cost for conversion cost in Department X is b. The unit cost for conversion cost in Department Y is
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.
Peter Senen Manufacturing Company has just completed its production activities for February 2019. The production manager furnished you their data for this month:
Department X | Department Y | |
Quantity units: | ||
In process, February 1 | 16,000 | 10,000 |
Stage of completion | 4/5 | 40% |
Started in process | 64,000 | |
Received from prior department | 70,000 | |
In process, February 28 | ? | 12,000 |
Stage of completion | 2/5 | 2/3 |
Costs data: | ||
In process, February 1 | $21,020 | $20,300 |
Current costs | ||
Materials | 28,350 | 46,800 |
Labor | 15,300 | 25,200 |
Manufacturing |
9,180 | 14,400 |
In Department X, material application is described to you as follows: 10% is applied at the start of the process; 25% when the process reaches the mid-point; and the remainder, when the process reaches 85% completion. Labor and Overhead are applied evenly throughout the process.
In Department Y, the application of material is described as follows: 20% when the process is ‘1/4 completed; 30% when the process is ‘1/2 completed and the balance, at the end of the process. Both departments use the FIFO method.
Required:
a. The unit cost for conversion cost in Department X is
b. The unit cost for conversion cost in Department Y is
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