Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (COGS) on the basis of the relative direct labor cost in these accounts at year- end. The following information is for the year ended December 31: The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80% of standard direct labor cost. Finished goods inventory at 12/31: Direct materials Direct labor Applied manufacturing overhead Direct materials inventory at 12/31 Cost of goods sold for the year ended 12/31: Direct materials Direct labor Applied manufacturing overhead Direct materials price variance (unfavorable) Direct materials usage variance (favorable) Direct labor rate variance (unfavorable) Direct labor efficiency variance (favorable) Actual manufacturing overhead incurred $ 93,960 140,940 112,752 65,800 $ 375,840 798,660 638,928 10,800 16,200 21,600 5,400 745,200 Required: 1. Compute the amount of Direct Materials Price Variance to be prorated to Finished Goods Inventory at December 31. 2. Compute the total amount of direct materials cost in the Finished Goods Inventory at December 31, after all materials variances have been prorated. 3. Compute the total amount of direct labor cost in the Finished Goods Inventory at December 31, after all variances have been prorated. 4. Compute the total Cost of Goods Sold (COGS) for the year ended December 31, after all variances have been prorated.
Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (COGS) on the basis of the relative direct labor cost in these accounts at year- end. The following information is for the year ended December 31: The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80% of standard direct labor cost. Finished goods inventory at 12/31: Direct materials Direct labor Applied manufacturing overhead Direct materials inventory at 12/31 Cost of goods sold for the year ended 12/31: Direct materials Direct labor Applied manufacturing overhead Direct materials price variance (unfavorable) Direct materials usage variance (favorable) Direct labor rate variance (unfavorable) Direct labor efficiency variance (favorable) Actual manufacturing overhead incurred $ 93,960 140,940 112,752 65,800 $ 375,840 798,660 638,928 10,800 16,200 21,600 5,400 745,200 Required: 1. Compute the amount of Direct Materials Price Variance to be prorated to Finished Goods Inventory at December 31. 2. Compute the total amount of direct materials cost in the Finished Goods Inventory at December 31, after all materials variances have been prorated. 3. Compute the total amount of direct labor cost in the Finished Goods Inventory at December 31, after all variances have been prorated. 4. Compute the total Cost of Goods Sold (COGS) for the year ended December 31, after all variances have been prorated.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are
purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of
direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to
Finished Goods Inventory and to Cost of Goods Sold (COGS) on the basis of the relative direct labor cost in these accounts at year-
end.
The following information is for the year ended December 31:
The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80%
of standard direct labor cost.
Finished goods inventory at 12/31:
Direct materials.
Direct labor
Applied manufacturing overhead
Direct materials inventory at 12/31
Cost of goods sold for the year ended 12/31:
Direct materials
Direct labor
Applied manufacturing overhead
Direct materials price variance (unfavorable)
Direct materials usage variance (favorable)
Direct labor rate variance (unfavorable)
Direct labor efficiency variance (favorable)
Actual manufacturing overhead incurred
1. Direct materials price variance
2. Direct materials cost
$93,960
140,940
112,752
65,800
Required:
1. Compute the amount of Direct Materials Price Variance to be prorated to Finished Goods Inventory at December 31.
2. Compute the total amount of direct materials cost in the Finished Goods Inventory at December 31, after all materials variances have
been prorated.
3. Compute the total amount of direct labor cost in the Finished Goods Inventory at December 31, after all variances have been
prorated.
4. Compute the total Cost of Goods Sold (COGS) for the year ended December 31, after all variances have been prorated.
(For all requirements, round your final answers to the nearest whole dollar amount.)
3. Direct labor cost
4. Cost of goods sold
$ 375,840
798,660
638,928
10,800
16,200
21,600
5,400
745,200
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