Coronado Industries has gathered the following information concerning one model of shoe: Variable manufacturing costs $40000 Variable selling and administrative costs $20000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1800000 ROI 20% Planned production and sales 4000 pairs
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.
Coronado Industries has gathered the following information concerning one model of shoe:
| Variable |
$40000 |
| Variable selling and administrative costs | $20000 |
| Fixed manufacturing costs | $160000 |
| Fixed selling and administrative costs | $120000 |
| Investment | $1800000 |
| ROI | 20% |
| Planned production and sales | 4000 pairs |
What is the desired ROI per pair of shoes?
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