Fixed costs in total: Manufacturing $100,000 (Budgeted or planned and actual) Selling & Admin $ 75,000 Variable costs per unit: Manufacturing $ 11 Selling & Admin. $ 2 There were 5,000 units in inventory January 1, 2011. During the year 25,000 units were produced and 28,000 units were sold. Planned or budgeted production was 20,000 units. Under variable costing, the product cost of one unit would be:
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.
Fixed costs in total: Manufacturing $100,000 (Budgeted or planned and actual)
Selling & Admin $ 75,000
Variable costs per unit: Manufacturing $ 11
Selling & Admin. $ 2
There were 5,000 units in inventory January 1, 2011. During the year 25,000 units were produced and 28,000 units were sold. Planned or budgeted production was 20,000 units.
Under variable costing, the product cost of one unit would be:
Assume that the operating income under variable costing is $28,000. What is the operating income under absorption costing? (You do not need to prepare an income statement to answer this question and the Price per unit is not given.)
The Production Volume Variance (PVV) variance is:
Should the PVV be ‘added’ or ‘subtracted’ from COGS to make the adjustment?
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