Alpine Productions uses a standard cost system for recording transactions. Alpine reported the following data for the year ended December 31: Sales revenues: $800,000 Cost of goods sold (standard costing): $382,000 Selling & administrative expenses: $105,000 Variances: Sales revenue variance $4100 F Direct materials cost variance 30 U Direct materials efficiency variance 300 F Direct l
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.
Alpine Productions uses a standard cost system for recording transactions. Alpine reported the following data for the year ended December 31:
Sales revenues: $800,000
Cost of goods sold (
Selling & administrative expenses: $105,000
Variances:
| Sales revenue variance | $4100 | F |
| Direct materials cost variance | 30 | U |
| Direct materials efficiency variance | 300 | F |
| Direct labor cost variance | 65 | U |
| Direct labor efficiency variance | 10 | F |
| Variable |
300 | U |
| Variable overhead efficiency variance | 80 | F |
| Fixed overhead cost variance | 430 | U |
| Fixed overhead volume variance | 100 | F |
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