2. What if sales increased to 363,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory. Finished goods inventory has to s
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.
4.2
Ending Finished Goods Inventory Budget
Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following
| Direct materials | $1.65 |
| Direct labor | 0.45 |
| Variable |
0.75 |
| Fixed overhead | 1.95 |
| Total unit cost | $4.80 |
For the coming year, Play-Disc expects to make 350,000 plastic discs, and to sell 333,000 of them. Budgeted beginning inventory in units is 20,000 with unit cost of $4.80. (There are no beginning or ending inventories of work in process.)
Step by step
Solved in 2 steps
