ACCT
S_Session 05 - Product Costing - Post Class.pdf

# Assume that the variances are closed to cogs actual

• Notes
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(Assume that the variances are closed to COGS.) Actual: \$16,500 + \$6,750 + \$0 + \$0 = \$23,250 Normal: \$16,500 + \$13,500 + \$0 - \$8,100 = \$21,900 Standard: \$10,000 + \$9,000 + \$7,800 - \$2,700 = \$24,100.

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Compared to closing to COGS, what if over-applied variances are prorated instead?
35 4a. Prorate the variances to COGS and Ending Inventory Actual Normal Standard Cost of Goods Sold (1,000 units) Direct Labor No Variance No Variance 7,800 x 10,000 = 12,000 6,500 Manufacturing Overhead No Variance (8,100) x 13,500 = 16,200 (6,750) (2,700) x 9,000 = 10,800 (2,250) Cost of Ending Inventory (200 units) Direct Labor No Variance No Variance 7,800 x 2,000 = 12,000 1,300 Manufacturing Overhead No Variance (8,100) x 2,700 = 16,200 (1,350) (2,700) x 1,800 = 10,800 (450)

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36 4b. Compute the Cost of Goods Sold Actual: \$16,500 + \$6,750 + \$0 + \$0 = \$23,250 Normal: \$16,500 + \$13,500 + \$0 - \$6,750 = \$23,250 Standard: \$10,000 + \$9,000 + \$6,500 - \$2,250 = \$23,250
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• Spring '08
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