ABC uses a standard costing system in connection with the manufacture of a "one size fits all" article clothing. Each unit of finished product contains 2 yards of direct materials. However, a 20% direct material spoilage calculated on input quantities occurs during the manufacturing process. The cost of the direct material is P3 per yard. The standard direct material cost per unit of finished product is (up to two decimal places)
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.
ABC uses a
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