During 2022, Sunland Corp. produced 37,200 units and sold 37,200 for $16.00 per unit. Variable manufacturing costs were $6.00 per unit. Annual fixed manufacturing overhead was $74,400 ($2.00 per unit). Variable selling and administrative costs were $2.00 per unit sold, and fixed selling and administrative expenses were $18,600. Suppose the accountant for Sunland Corp. uses normal-absorption costing and uses the budgeted volume of 46,500 units to allocate the fixed overhead rather than the actual production volume of 37,200 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs.
During 2022, Sunland Corp. produced 37,200 units and sold 37,200 for $16.00 per unit. Variable manufacturing costs were $6.00 per unit. Annual fixed manufacturing overhead was $74,400 ($2.00 per unit). Variable selling and administrative costs were $2.00 per unit sold, and fixed selling and administrative expenses were $18,600. Suppose the accountant for Sunland Corp. uses normal-absorption costing and uses the budgeted volume of 46,500 units to allocate the fixed overhead rather than the actual production volume of 37,200 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:Prepare a normal-absorption-costing income statement for the first year of operation.
SunlandCorp.
Income Statement-Normal-Absorption Costing
For the Year Ended December 31, 2022
:
LA
LA
LA
Transcribed Image Text:During 2022, Sunland Corp. produced 37,200 units and sold 37,200 for $16.00 per unit. Variable
manufacturing costs were $6.00 per unit. Annual fixed manufacturing overhead was $74,400 ($2.00 per unit).
Variable selling and administrative costs were $2.00 per unit sold, and fixed selling and administrative
expenses were $18,600. Suppose the accountant for Sunland Corp. uses normal-absorption costing and uses
the budgeted volume of 46,500 units to allocate the fixed overhead rather than the actual production volume
of 37,200 units. The company expenses production volume variance to cost of goods sold in the accounting
period in which it occurs.
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