A firm makes two products, Alpha and Beta. Alpha Beta Sales price per unit $7.00 $10.00 Variable cost per unit $4.00 $8.00 Demand 5,000 4,000 Machine hours used 5 2 The total available machine hours is 10,000. How many of Alpha should be in the product mix to maximize the profit?
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.
A firm makes two products, Alpha and Beta.
|
Alpha |
Beta |
|
|
Sales price per unit |
$7.00 |
$10.00 |
|
Variable cost per unit |
$4.00 |
$8.00 |
|
Demand |
5,000 |
4,000 |
|
Machine hours used |
5 |
2 |
The total available machine hours is 10,000.
How many of Alpha should be in the product mix to maximize the profit?
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