anufacturing operations for 2021 are as follows: $ Per unit: Sales price 100 Direct material cost 36 Direct wages 8 Variable production overhead 6 Per month: Fixed production overhead 198 000 Fixed selling expenses 24 000 Fixed administration expenses 52 000 Variable selling expenses is 10% o
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.
Gates Manufacturing operations for 2021 are as follows:
$
Per unit:
Sales price 100
Direct material cost 36
Direct wages 8
Variable production overhead 6
Per month:
Fixed production overhead 198 000
Fixed selling expenses 24 000
Fixed administration expenses 52 000
Variable selling expenses is 10% of sales value.
Normal capacity was 11 000 units per month.
January February
Units Units
Sales 20 000 24 000
Production 24 000 20 000
Using the two methods:
A. Compute the unit production cost
B. Determine the value of the closing inventory
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