Presented below is information related to Waveland Inc. Cost Retail Inventory, 12/31/20 $250,000 $ 390,000 Purchases 914,500 1,460,000 Purchase returns 60,000 80,000 Purchase discounts 18,000 — Gross sales revenue (after employee discounts) — 1,410,000 Sales returns — 97,500 Markups — 120,000 Markup cancellations — 40,000 Markdowns — 45,000 Markdown cancellations — 20,000 Freight-in 42,000 — Employee discounts granted — 8,000 Loss from breakage (normal) — 4,500 Instructions Assuming that Waveland Inc. uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2021.
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.
Presented below is information related to Waveland Inc.
| Cost | Retail | |||
| Inventory, 12/31/20 | $250,000 | $ 390,000 | ||
| Purchases | 914,500 | 1,460,000 | ||
| Purchase returns | 60,000 | 80,000 | ||
| Purchase discounts | 18,000 | — | ||
| Gross sales revenue (after employee discounts) | — | 1,410,000 | ||
| Sales returns | — | 97,500 | ||
| Markups | — | 120,000 | ||
| Markup cancellations | — | 40,000 | ||
| Markdowns | — | 45,000 | ||
| Markdown cancellations | — | 20,000 | ||
| Freight-in | 42,000 | — | ||
| Employee discounts granted | — | 8,000 | ||
| Loss from breakage (normal) | — | 4,500 |
Instructions
Assuming that Waveland Inc. uses the conventional retail inventory method, compute the cost of its ending inventory at December 31, 2021.
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