Product X is produced in department A and transferred to the finished goods warehouse when completed. The 4,800 units in WIP at 1 March 2022 were 20% complete. A total of 172,800 units were started during March 2022 and 169,800 units were completed and transferred out. On 31 March 2022, 7,800 units remained uncompleted. The ending WIP inventory was 40% complete. In department A, direct material 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.
Product X is produced in department A and transferred to the finished goods warehouse when
completed.
The 4,800 units in WIP at 1 March 2022 were 20% complete. A total of 172,800 units were started
during March 2022 and 169,800 units were completed and transferred out. On 31 March 2022,
7,800 units remained uncompleted. The ending WIP inventory was 40% complete.
In department A, direct material is added at the beginning of the manufacturing process whilst
conversion costs are incurred evenly throughout the manufacturing process.
Question:
Compute the equivalent unit for each product cost category in department B for the month of
March 2022 using the weighted average cost method and FIFO method.
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