ApplicationWe assume the following model , regarding the final stock of materials and raw materials Sf =Si + I-E. Based on the corresponding data presented in table, explain the evolution of the finalstock of raw materials and materials using the relative balance sheet method.ElementsIndexJanuary2021Initial stock of 30.000FebruaryAbsolute2021deviation40.00010.000raw materialsand(40.000-30.000)/30.000)*100)+100=133,33%materials(Si)Supply of raw100.000120.00020.000120%materials andmaterials(I)Consumption40.00020.000-20.00050%of rawmaterials andmaterials (E)Final stock of90.000140.00050.000155,55%raw materialsandmaterials(Sf)

As per the inventory equation, opening inventory + purchases= cost of goods sold + closing…

Absolute deviation 10.000 Elements Index January 2021 Initial stock of 30.000 February 2021 40.000 (((40.000- 30.000)/30.000)*100)+100= 133,33% raw materials and materials(Si) Supply of raw 100.000 materials and 120.000 20.000 120% materials(I) Consumption 40.000 of raw materials and materials (E) Final stock of 90.000 20.000 -20.000 50% 140.000 50.000 155,55% raw materials and materials(Sf)

Absolute deviation 10.000 Elements Index January 2021 Initial stock of 30.000 February 2021 40.000 (((40.000- 30.000)/30.000)*100)+100= 133,33% raw materials and materials(Si) Supply of raw 100.000 materials and 120.000 20.000 120% materials(I) Consumption 40.000 of raw materials and materials (E) Final stock of 90.000 20.000 -20.000 50% 140.000 50.000 155,55% raw materials and materials(Sf)

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead

Section: Chapter Questions

Problem 13E: Using variance analysis and interpretation Last year, Wrigley Corp. adopted a standard cost system....

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