Audrina's Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping department records both variable direct batch-level costs and fixed batch-level overhead costs. The following information pertains to shipping department costs for 2017. Pairs of shoes shipped Average number of pairs of shoes per crate Packing hours per crate Variable direct cost per hour Fixed overhead cost Static-Budget Amounts 225,000 15 0.9 hours Actual Results 180,000 10 1.1 hour $18 $16 $54,000 $56,500
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.
Assuming fixed
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
