Electro Company manufactures transmissions for electric cars. Management reports ending finished goods inventory for the first quarter at 139,200 units. The following unit sales are budgeted during the rest of the year: second quarter, 232,000 units; third quarter, 391,000 units; and fourth quarter, 376,500 units. Company policy calls for the ending finished goods inventory of a quarter to equal 60% of the next quarter's budgeted unit sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.
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.
16.66points
Item 1
Electro Company manufactures transmissions for electric cars. Management reports ending finished goods inventory for the first quarter at 139,200 units. The following unit sales are budgeted during the rest of the year: second quarter, 232,000 units; third quarter, 391,000 units; and fourth quarter, 376,500 units. Company policy calls for the ending finished goods inventory of a quarter to equal 60% of the next quarter's budgeted unit sales.
Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.
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