At the beginning of the year, ABC Inc. budgeted the following: Units 10,000u; Sales P100,000; Total variable expenses P 60,000; Total fixed expenses P 20,000; Net income P 20,000; Factory overhead (Variable P 30,000 and Fixed P 10,000). There were no beginning inventories. At the end of the year, no work was in process, total factory overhead incurred was P39,500, and overapplied factory overhead was P1,500. Factory overhead was applied on the basis of budgeted unit production. How many units were produced this year?
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.
At the beginning of the year, ABC Inc. budgeted the following: Units 10,000u; Sales P100,000; Total variable expenses P 60,000; Total fixed expenses P 20,000; Net income P 20,000; Factory
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