company produces a product and sells 25000 units a month at a selling price of £38. Direct material cost is £12 per unit and direct labour cost is £10 per unit of output. The total fixed costs is £288,000. The factory has a maximum production capacity of 40,000 units. Calculate the margin of safety
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.
A company produces a product and sells 25000 units a month at a selling price of £38. Direct material cost is £12 per unit and direct labour cost is £10 per unit of output. The total fixed costs is £288,000. The factory has a maximum production capacity of 40,000 units. Calculate the margin of safety ratio
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