Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 20%. The company's controller suspects that the year-end dollar balances shown below in the inventory accounts may be incorrect. Work in process, December 31 (materials 100 % complete; conversion 60% complete) Finished goods, December 31 Work in process, beginning of year (materials 100% complete; conversion 50% complete) Started into production Costs added during the year Units completed during the year Costs Units Materials 27,000 There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of process costing. There is only one processing department. A review of the company's inventory and cost records shows the following: 607,000 Units 750,000 Costs 32,000 37,000 $ 67,000 Conversion $ 120,500 $ 29,000 $ 55,000 $ 757,000 $ 2,070,000 Required: 1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year. (Round your "Cost per equivalent unit" answers to 2 decimal places.) 2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories. 3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as of December 31. (Round intermediate calculations to 2 decimal places.)
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.
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![Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas
mileage by 20%. The company's controller suspects that the year-end dollar balances shown below in the inventory accounts may be
incorrect.
Work in process, December 31 (materials 100% complete;
conversion 60% complete)
Finished goods, December 31
Work in process, beginning of year
(materials 100% complete;
conversion 50% complete)
Started into production
Costs added during the year
Units completed during the year
Costs
Units Materials
There were no finished goods inventories at the beginning of the year. The company uses the weighted-average method of process
costing. There is only one processing department.
A review of the company's inventory and cost records shows the following:
27,000
607,000
Units
750,000
Costs
32,000
37,000
$ 67,000
Conversion
$ 120,500
$ 29,000
$ 55,000
$ 757,000 $ 2,070,000
Required:
1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year. (Round your "Cost per
equivalent unit" answers to 2 decimal places.)
2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories.
3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as
of December 31. (Round intermediate calculations to 2 decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa880cc3d-71b2-44bc-9eb8-ccb18aa2c0ed%2F16b0f33e-8c53-42fb-b432-cceda168b786%2Fygzel0l_processed.jpeg&w=3840&q=75)
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