ABC had P400,000 budgeted fixed overhead costs and based its standard on normal activity of 40,000 units. Actual fixed overhead costs were P430,000, actual production was 36,000 units, and sales were 30,000 units. The volume variance was a. P 30,000 b. P 40,000 c. P 70,000 d. P 77,777
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.
45. ABC had P400,000 budgeted fixed
Actual fixed overhead costs were P430,000, actual production was 36,000 units, and sales were 30,000 units.
The volume variance was
a. P 30,000
b. P 40,000
c. P 70,000
d. P 77,777
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