6 7 Standard Job Order Costing- Variance Analysis 8 9 10 11 12 Special order lamps are manufactured in division S. Because of the precise nature of the process a 13 standard cost system has been developed. The following standards are used for the special orders: 21 22 23 24 Standards 25 33 Lamp Kits Direct Labor 34 Variable Overhead 35 Fixed Overhead 36 37 45 46 Total $16.000000 per lamp 2.400000 per lamp (4 lamps/hr.) 0.250000 per lamp (4 lamps/hr.) 10.000000 per lamp $28.650000 Fixed overhead is based on expected production of 4,008 customized lamps each month. 17 To keep records of the actual cost of a job, a Job Order Cost System has been developed. Entries 18 are made to the Job Order System at actual cost (overhead is applied based on actual labor hours) 9 while entries are made to the accounting system at standard. Variance analysis is used to analyze the 57 differences. 58 59 1 Job Order Costing Section 9 0 On January 1, 20x2, Division S began Job 1101 for the Client, THE BIG CHILDREN STORE. The 1 job called for 4,000 customized lamps. The following set of transactions occurred from 2 January 5 until the job was completed: 3 1 2 5-Jan Purchased 4,025 Lamp Kits @ $16.45 per kit. 9-Jan 4,050 sets of Lamp Kits were requisitioned. 17-Jan Payroll of 620 Direct Labor Hours @ $9.60 per hour. 30-Jan Payroll of 670 Direct Labor Hours @ $9.85 per hour. 30-Jan 3,992 lamps were completed and shipped. All materials requisitioned were used or scrapped. Month End Overhead Information Actual Variable Overhead Actual Fixed Overhead $ 1,470.60 $ 40,873.45