Selected ledger accounts for Realm Company are given below for the just-completed year: Raw Materials 42,000 Credits 480,000 84,000 Bal. 1/1 Debits Bal. 31/12 Debits Bal. 1/1 Direct materials Direct labour Overhead Bal. 31/12 Debits Bal. 1/1 Debits Bal. 31/12 Manufacturing Overhead 429,800 Credits Debits Work in Process 88,000 Credits 344,000 134,000 447, 200 ? Factory Wages Payable 209,000 Bal. 1/1 Credits Bal. 31/12 Finished Goods 61,600 Credit ? 166,000 Cost of Goods Sold 22,000 205,000 18,000 912, 100
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.
Required:
1. What was the cost of raw materials put into production during the year?
2. How much of the materials in requirement 1 consisted of indirect materials?
3. How much of the
4. What was the cost of goods manufactured for the year?
5. What was the cost of goods sold for the year (before considering underapplied or overapplied overhead)?
6. If overhead is applied to production on the basis of direct materials cost, what rate was in effect during the year?
7. Was manufacturing overhead underapplied or overapplied? By how much?
8. Compute the ending balance in the Work in Process inventory account. Assume that this balance consists entirely of goods started during the year. If $33,200 of this balance is direct materials cost, how much of it is direct labour cost? Manufacturing overhead cost?
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