Zain Company produces pipes for concert-quality organs. Each job is unique. In April 2020, it completed all outstanding orders, and then, in May 2020, it worked on only two jobs, M1 and M2: Job M1 Job M2 Direct Materials $ 78,000 $ 51,000 Direct Labor 273,000 208,000 Direct manufacturing labor is paid at the rate of $26 per hour. Manufacturing overhead costs are allocated at a budgeted rate of $20 per direct manufacturing labor-hour. Only Job M1 was completed in May. Instructions: Calculate the total cost for Job M1. 1,100 pipes were produced for Job M1. Calculate the cost per pipe. Prepare the journal entry transferring Job M1 to finished goods.
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.
Zain Company produces pipes for concert-quality organs. Each job is unique. In April 2020, it completed all outstanding orders, and then, in May 2020, it worked on only two jobs, M1 and M2:
|
Job M1 |
Job M2 |
|
|
Direct Materials |
$ 78,000 |
$ 51,000 |
|
Direct Labor |
273,000 |
208,000 |
Direct manufacturing labor is paid at the rate of $26 per hour. Manufacturing overhead costs are allocated at a budgeted rate of $20 per direct manufacturing labor-hour. Only Job M1 was completed in May.
Instructions:
- Calculate the total cost for Job M1.
- 1,100 pipes were produced for Job M1. Calculate the cost per pipe.
- Prepare the
journal entry transferring Job M1 to finished goods. - What is the ending balance in the Work-in-Process Control account?
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