Bonita Industries has the following budgeted costs for the next year: Time Charges Material Charges Shop employee' wages and benefits $130000 $ - Parts manager's salary and benefits - 45000 Office employee's salary and benefits 35000 25000 Other overhead 15000 55000 Invoice cost of parts and materials - 420000 Total budgeted costs $180000 $545000 The labor rate to be used next year assuming 7500 hours of repair time and a profit margin of $25 per labor hour is
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.
Bonita Industries has the following budgeted costs for the next year:
| Time Charges | Material Charges | |
| Shop employee' wages and benefits | $130000 | $ - |
| Parts manager's salary and benefits | - | 45000 |
| Office employee's salary and benefits | 35000 | 25000 |
| Other |
15000 | 55000 |
| Invoice cost of parts and materials | - | 420000 |
| Total budgeted costs | $180000 | $545000 |
The labor rate to be used next year assuming 7500 hours of repair time and a profit margin of $25 per labor hour is
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