Clyde’s Pets manufactures chewing bones for puppies. At the end of December 2008, his accounting records showed the following: Inventories Beginning Ending Materials $13,500 $9,000 Work in process 0 1,250 Finished goods 0 5,700 Other information: Direct material purchases $31,000 Utilities for plants $4,500 Plant janitorial service 1,250 Rent on plants 9,000 Sales salaries expense 5,000 Customer service hotline expense 1,000 Delivery expense 1,500 Direct labor 18,000 Sales revenue 105,000 Requirements: a) Prepare a schedule of cost of goods manufactured for the year ended December 31, 2008. b) Prepare an income statement for Clyde’s Pets for the year ended December 31, 2008. c) Given that the company manufactured 17,500 units, of its product in 2008, compute the company’s unit product cost for the year.
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.
- Clyde’s Pets manufactures chewing bones for puppies. At the end of December 2008, his accounting records showed the following:
Inventories Beginning Ending
Materials $13,500 $9,000
Work in process 0 1,250
Finished goods 0 5,700
Other information:
Direct material purchases $31,000 Utilities for plants $4,500
Plant janitorial service 1,250 Rent on plants 9,000
Sales salaries expense 5,000 Customer service hotline expense 1,000
Delivery expense 1,500 Direct labor 18,000
Sales revenue 105,000
Requirements:
a) Prepare a schedule of cost of goods manufactured for the year ended December 31, 2008.
b) Prepare an income statement for Clyde’s Pets for the year ended December 31, 2008.
c) Given that the company manufactured 17,500 units, of its product in 2008, compute the company’s unit product cost for the year.
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