Carla Vista's Recording Studio rents studio time to musicians in two-hour blocks. Each session includes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipated annual volume is 1,400 sessions. The company has invested $2,084,250 in the studio and expects a return on investment of 20%. Budgeted costs for the coming year are as follows: Direct materials (tapes, CDs, etc.) Direct labour Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Session $20 410 60 50 Total $1.316.000 707.000

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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.