Selected T-accounts of Moore Company are given below for the just completed year: Raw Materials Bal. 1/1 31,000 Credits ? Debits 152,000 Bal. 12/31 41,000 Manufacturing Overhead Debits 181,900 Credits ? Work in Process Bal. 1/1 36,000 Credits 518,000 Direct materials 106,000 Direct labor 198,000 Overhead 207,900 Bal. 12/31 ? Factory Wages Payable Debits 217,000 Bal. 1/1 17,000 Credits 212,000 Bal. 12/31 12,000 Finished Goods Bal. 1/1 56,000 Credits ? Debits ? Bal. 12/31 84,000 Cost of Goods Sold Debits ? Required: 1. What was the cost of raw materials used in production during the year? 2. How much of the materials in (1) above consisted of indirect materials? 3. How much of the factory labor cost for the year consisted of indirect labor?
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.
Selected T-accounts of Moore Company are given below for the just completed year:
| Raw Materials | |||
| Bal. 1/1 | 31,000 | Credits | ? |
| Debits | 152,000 | ||
| Bal. 12/31 | 41,000 |
| Manufacturing |
|||
| Debits | 181,900 | Credits | ? |
| Work in Process | |||
| Bal. 1/1 | 36,000 | Credits | 518,000 |
| Direct materials | 106,000 | ||
| Direct labor | 198,000 | ||
| Overhead | 207,900 | ||
| Bal. 12/31 | ? |
| Factory Wages Payable | |||
| Debits | 217,000 | Bal. 1/1 | 17,000 |
| Credits | 212,000 | ||
| Bal. 12/31 | 12,000 |
| Finished Goods | |||
| Bal. 1/1 | 56,000 | Credits | ? |
| Debits | ? | ||
| Bal. 12/31 | 84,000 |
| Cost of Goods Sold | |||
| Debits | ? |
Required:
1. What was the cost of raw materials used in production during the year?
2. How much of the materials in (1) above consisted of indirect materials?
3. How much of the
4. What was the cost of goods manufactured for the year?
5. What was the unadjusted cost of goods sold for the year? Do not include any underapplied or overapplied overhead in your answer.
6. If overhead is applied to production on the basis of direct labor cost, what predetermined overhead rate was in effect during the year?
7. Was manufacturing overhead underapplied or overapplied? By how much?
8. Compute the ending balance in Work in Process. Assume that this balance consists entirely of goods started during the year. If $12,000 of this balance is direct labor cost, how much of it is direct materials cost? Applied overhead cost?
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