The industrial company KLM SA manufactures fitness equipment for playgrounds upon orders from its customers. During september of the fiscal year 20x9, it processed and completed exclusively the order No 200, which concerned 2000 individual swings with backpacks with a sale price of 200 € each. During the month of September, the following actions were taken: Purchased raw materials costing 180,000 with credit Raw materials costing 150.000€ were consumed in the production of raw materials They were paid to the staff through the sight account for direct labour of September 85000 €. The employer's contributions amounted to 20.000€ and the deductions to 15.000€ respectively. Order No. 200 was delivered to the customer on September 29th . Payment will be made in 2 months. KLM S.A. charges general industrial expenses to orders using a predetermined attribution rate that at the beginning of the fiscal year was estimated at 60% of the cost of direct labor. Requested: To carry out the journal entries that were made in September from the purchase of the raw materials until the delivery of the order to the customer. Present business activities that the method of costing personalized production (on-demand costing) could be effectively applied.
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.
(5) The industrial company KLM SA manufactures fitness equipment for playgrounds upon orders from its customers. During september of the fiscal year 20x9, it processed and completed exclusively the order No 200, which concerned 2000 individual swings with backpacks with a sale price of 200 € each.
During the month of September, the following actions were taken:
Purchased raw materials costing 180,000 with credit
Raw materials costing 150.000€ were consumed in the production of raw materials
They were paid to the staff through the sight account for direct labour of September 85000 €. The employer's contributions amounted to 20.000€ and the deductions to 15.000€ respectively.
Order No. 200 was delivered to the customer on September 29th . Payment will be made in 2 months.
KLM S.A. charges general industrial expenses to orders using a predetermined attribution rate that at the beginning of the fiscal year was estimated at 60% of the cost of direct labor. Requested:
- To carry out the
journal entries that were made in September from the purchase of the raw materials until the delivery of the order to the customer. - Present business activities that the method of costing personalized production (on-demand costing) could be effectively applied.
Step by step
Solved in 2 steps
