4. Selected account balances for the year ended December 31 are provided below for Melody Company: Selling and Administrative salaries . . . . . . . . . . . . . . . . . . . . P110,000 Purchases of raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . P290,000 Direct Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ? Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P80,000 Manufacturing overhead . . . . . . . . . . . . . . . . . . .. . . . . . . . . . P270,000 Sales commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P50,000 Inventory balances at the beginning and end of the year were as follow: Beginning of the year End of the year Raw materials . . . . . . . . . . . . . . P40,000 P10,000 Work in process . .. . . . . . . .. . . ? P35,000 Finished goods . . . . . . . . . . . . . P50,000 ? The total manufacturing costs for the were P683,000; the goods available for sale totaled P740,000; and the cost of goods sold totaled P660,000. Required: Prepare a schedule of costs of goods manufactured and the costs of goods sold section of the company’s income statement for the year.
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.
4. Selected account balances for the year ended December 31 are provided below for Melody
Company:
Selling and Administrative salaries . . . . . . . . . . . . . . . . . . . . P110,000
Purchases of raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . P290,000
Direct Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P80,000
Manufacturing overhead . . . . . . . . . . . . . . . . . . .. . . . . . . . . . P270,000
Sales commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P50,000
Inventory balances at the beginning and end of the year were as follow:
Beginning of the year End of the year
Raw materials . . . . . . . . . . . . . . P40,000 P10,000
Work in process . .. . . . . . . .. . . ? P35,000
Finished goods . . . . . . . . . . . . . P50,000 ?
The total
P740,000; and the cost of goods sold totaled P660,000.
Required: Prepare a schedule of costs of goods manufactured and the costs of goods sold section
of the company’s income statement for the year.
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