Pigot Corporation uses job costing and the budgeted manufacturing costs for the year are as follows: Direct materials $ 740,000 Direct labor 210,000 Factory overhead 630,000 The actual direct materials and direct labor costs charged to Job Number 432 during the year were as follows: Direct materials $29,000 Direct labor 18,000 Pigot applies manufacturing overhead to production orders on the basis of direct labor cost using rates predetermined at the beginning of the year based on the annual budget. The total cost associated with Job Number 432 for the year should be
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.
Pigot Corporation uses
| Direct materials | $ 740,000 |
|---|---|
| Direct labor | 210,000 |
| Factory |
630,000 |
The actual direct materials and direct labor costs charged to Job Number 432 during the year were as follows:
| Direct materials | $29,000 |
|---|---|
| Direct labor | 18,000 |
Pigot applies manufacturing overhead to production orders on the basis of direct labor cost using rates predetermined at the beginning of the year based on the annual budget. The total cost associated with Job Number 432 for the year should be
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