Question 2. A company's Department 2 costs for June were: Cost from Department 1 $20,000 Cost added in Department 2: Materials 43,415 Labor 56,100 Factory overhead (FOH) 58,575 The quantity schedule shows 11,500 units were received during the month from Department 1; 7,000 units were transferred to finished goods; and 5,000 units in process at the end of June were 50% complete as to materials cost, 25% complete as to Labour cost, and 20% as MOH. Required: Prepare Cost of production report.
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.
Question 2. A company's Department 2 costs for June were:
|
Cost from Department 1 |
$20,000 |
|
Cost added in Department 2: |
|
|
Materials |
43,415 |
|
Labor |
56,100 |
|
Factory overhead (FOH) |
58,575 |
The quantity schedule shows 11,500 units were received during the month from Department 1; 7,000 units were transferred to finished goods; and 5,000 units in process at the end of June were 50% complete as to materials cost, 25% complete as to Labour cost, and 20% as MOH.
Required: Prepare Cost of production report.
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