Bell expects to produce 1,900 finished goods units in January and 2,200 finished goods units in February. The company budgets 4 pounds of Direct Materials is used to manufacture each finished goods unit. The company budgets the cost of Direct Materials to be $12 per pound. (Indirect materials are insignificant and not considered for budgeting purposes.) The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 4,830 pounds. Bell desires the ending balance in Raw Materials Inventory to be 25% of the next month's direct materials needed for production. Desired ending balance for February is 4,960 pounds. The budgeted cost of purchases of direct raw materials in February is
Bell expects to produce 1,900 finished goods units in January and 2,200 finished goods units in February. The company budgets 4 pounds of Direct Materials is used to manufacture each finished goods unit. The company budgets the cost of Direct Materials to be $12 per pound. (Indirect materials are insignificant and not considered for budgeting purposes.) The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 4,830 pounds. Bell desires the ending balance in Raw Materials Inventory to be 25% of the next month's direct materials needed for production. Desired ending balance for February is 4,960 pounds. The budgeted cost of purchases of direct raw materials in February is
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 9P: USD Inc. has established the following standard cost per unit:
Although 10,000 units were budgeted,...
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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.
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Transcribed Image Text:Bell expects to produce 1,900 finished goods units in January and 2,200 finished
goods units in February. The company budgets 4 pounds of Direct Materials is
used to manufacture each finished goods unit. The company budgets the cost of
Direct Materials to be $12 per pound. (Indirect materials are insignificant and not
considered for budgeting purposes.) The balance in the Raw Materials Inventory
account (all direct materials) on January 1 is 4,830 pounds. Bell desires the ending
balance in Raw Materials Inventory to be 25% of the next month's direct materials
needed for production. Desired ending balance for February is 4,960 pounds.
II
The budgeted cost of purchases of direct raw materials in February is
ngs
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