During the year, a company purchased raw materials of $77,319, and incurred direct labor costs of $125,800. Overhead is applied at the rate of 80% of the direct labor cost. These are the inventory balances: Beginning Ending Raw materials inventory $17,433 $16,426 Work in process inventory 241,441 234,422 Finished goods inventory 312,841 342,384 Compute the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold. Cost of materials used in production $fill in the blank 1 Cost of goods manufactured $fill in the blank 2 Cost of goods sold $fill in the blank 3
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.
During the year, a company purchased raw materials of $77,319, and incurred direct labor costs of $125,800. Overhead is applied at the rate of 80% of the direct labor cost. These are the inventory balances:
| Beginning | Ending | |||
| Raw materials inventory | $17,433 | $16,426 | ||
| Work in process inventory | 241,441 | 234,422 | ||
| Finished goods inventory | 312,841 | 342,384 |
Compute the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold.
| Cost of materials used in production | $fill in the blank 1 |
| Cost of goods manufactured | $fill in the blank 2 |
| Cost of goods sold | $fill in the blank 3 |
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