: EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: January February March Unit data: Beginning inventory 150 150 Production 1,500 1,400 1,520 Sales 1,350 1,400 1,530 Variable costs: Manufacturing cost per unit produced Operating (marketing) cost per unit sold $ 1,000 $ 1,000 $ 1,000 800 24 800 2$ 800 Fixed costs: Manufacturing costs Operating (marketing) costs $525,000 $130,000 $525,000 $525,000 $130,000 $130,000
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.
The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed
Q. Explain the difference in operating income for January, February, and March under variable costing and absorption costing.
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