During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials Direct labor Variable overhead Fixed overhead he company produced 25,000 units, and sold 20,000 units, leaving 5,000 units in inventory at year-end. Income calculated under variable costing is etermined to be $315,000. How much income is reported under absorption costing? Multiple Choice $315,000 $265,000 $5 per unit $3 per unit $4 per unit $ 250,000 per year $565,000
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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