A partial listing of costs incurred at Falkenberg Corporation during October appears below: Direct materials ........................... $195,000 Utilities, factory ............................ $9,000 Sales commissions ...................... $75,000 Adminnistrative salaries .............. $113,000 Indirect labor ................................ $30,000 Advertising ................................... $119,000 Depreciation of production equipment...... $28,000 Direct labor ................................... $105,000 Depreciation of administrative equipment... $44,000 Required: a. What is the total amount of product cost listed above
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 partial listing of costs incurred at Falkenberg Corporation during October appears below:
Direct materials ........................... $195,000
Utilities, factory ............................ $9,000
Sales commissions ...................... $75,000
Adminnistrative salaries .............. $113,000
Indirect labor ................................ $30,000
Advertising ................................... $119,000
Direct labor ................................... $105,000
Depreciation of administrative equipment... $44,000
Required:
a. What is the total amount of product cost listed above?
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