12. Novelli's Nursery has developed the following data in order to calculate the lower of cost or net realizable value for its products. The individual products are listed within the categories of trees. Selling Price Cost Broad leaf trees: Ash $ 1,980 $ 1,880 Beech 2,470 1,780 Needle leaf trees: Cedar $ 2,860 $ 1,930 Fir 4,050 3,530 Fruit trees: Apple $ 1,980 $ 1,580 Cherry 2,570 1,980
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.
12.
Novelli's Nursery has developed the following data in order to calculate the lower of cost or net realizable value for its products. The individual products are listed within the categories of trees.
| Selling Price |
Cost | |||||
| Broad leaf trees: | ||||||
| Ash | $ | 1,980 | $ | 1,880 | ||
| Beech | 2,470 | 1,780 | ||||
| Needle leaf trees: | ||||||
| Cedar | $ | 2,860 | $ | 1,930 | ||
| Fir | 4,050 | 3,530 | ||||
| Fruit trees: | ||||||
| Apple | $ | 1,980 | $ | 1,580 | ||
| Cherry | 2,570 |
1,980 |
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