A company produces 5,000 units and has three cost pools: Assembly, Sanding, and Painting and estimates total manufacturing overhead to be $461,764. Direct Materials are $618,000 and Direct Labor is $325,000. Assembly uses 8,500 machine hours to measure its activities and estimates overhead of $415,905. Sanding uses 1,900 direct-labor hours to measure its activities and estimates overhead of $32,414. Painting uses 500 machine setups to measure its activities and estimates overhead of $13,445. Administrative costs are $255,000 and Selling costs are 113,000. What is the production cost per unit?

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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. 

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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.