Sofie Manufacturers produces decorative pillows and sells them at $98 per unit. In the first month of operation, 1,880 units were produced and 1,720 units were sold. Actual fixed costs are the same as the amount budgeted for the month and the per unit administration cost for production is provided below. Other information for the month includes: $23.49 per unit Variable manufacturing costs Variable marketing costs $5.54 per unit Fixed manufacturing costs $14.80 per unit Administrative expenses, all fixed $7.53 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 160 units What is the operating income of the business in the first month of operation using the absorption costing method?
Sofie Manufacturers produces decorative pillows and sells them at $98 per unit. In the first month of operation, 1,880 units were produced and 1,720 units were sold. Actual fixed costs are the same as the amount budgeted for the month and the per unit administration cost for production is provided below. Other information for the month includes: $23.49 per unit Variable manufacturing costs Variable marketing costs $5.54 per unit Fixed manufacturing costs $14.80 per unit Administrative expenses, all fixed $7.53 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 160 units What is the operating income of the business in the first month of operation using the absorption costing method?
Chapter7: Budgeting
Section: Chapter Questions
Problem 1PA: Lens Junction sells lenses for $45 each and is estimating sales of 15,000 units in January and...
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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.
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