Allocation of variances LO4,5 Breckenridge Manufacturing Corporation uses a standard cost system that records raw materials at
Question:
Allocation of variances LO4,5 Breckenridge Manufacturing Corporation uses a standard cost system that records raw materials at actual cost, records materials price variances at the time that raw materials are issued to work in process, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the direct materials balances in the appropriate accounts, and variances associated with direct labor are prorated based on the direct labor balances in the appropriate accounts. The following information is available for Breckenridge for the year ended December 3 1
There were no beginning inventories and no ending work in process inventory.
Required:
Calculate the following:
1. Amount of materials price variance to be prorated to finished goods inventory at December 31. (Hint: You must first determine the ratio of direct materials cost in the ending finished goods inventory.)
2. Total amount of direct materials cost in the finished goods inventory at December 3 1 , after all variances have been prorated.
3. Total amount of direct labor cost in the finished goods inventory at December 3 1, after all variances have been prorated.
4. Total cost of goods sold for the year ended December 3 1 , after all variances have been prorated.
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