Witt Recreation Company (WRC) makes e-bikes. The company currently manufactures two models, the Coaster and the Traveler, in one of the WRC factories. Both models require the same assembling operations. The difference between the models is the cost of materials. The following data are available for the second quarter. Coaster Traveler Total Number of bikes assembled 750 450 1,200 Materials cost per bike $ 625 $ 1,201 Other costs: Direct labor $ 298,200 Depreciation and lease 381,200 Supervision and control 246,200 Factory administration 339,200 Required: Witt Recreation Company uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost of each model assembled in the second quarter.
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.
Witt Recreation Company (WRC) makes e-bikes. The company currently manufactures two models, the Coaster and the Traveler, in one of the WRC factories. Both models require the same assembling operations. The difference between the models is the cost of materials. The following data are available for the second quarter.
| Coaster | Traveler | Total | |
|---|---|---|---|
| Number of bikes assembled | 750 | 450 | 1,200 |
| Materials cost per bike | $ 625 | $ 1,201 | |
| Other costs: | |||
| Direct labor | $ 298,200 | ||
| 381,200 | |||
| Supervision and control | 246,200 | ||
| Factory administration | 339,200 |
Required:
Witt Recreation Company uses operations costing and assigns conversion costs based on the number of units assembled. Compute the cost of each model assembled in the second quarter.
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