Legacy Company completed 200 units of customized jewelry. The product cost per unit: Direct materials P7,500 Direct labor 2,500 Factory overhead 2,500 P12,500 However, upon quality inspection: 10 units were sub-standard due to external failure and are to be rework. The rework cost per unit: Direct materials P1,500 Direct labor 500 Factory overhead 500 P2,500 How much is the amount charged to the Work-in process for the rework?
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.
Legacy Company completed 200 units of customized jewelry.
The product cost per unit:
Direct materials P7,500
Direct labor 2,500
Factory overhead 2,500
P12,500
However, upon quality inspection: 10 units were sub-standard due to external failure and are to be rework.
The rework cost per unit:
Direct materials P1,500
Direct labor 500
Factory overhead 500
P2,500
How much is the amount charged to the Work-in process for the rework?
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