Explain with correct reasons in each of the following: Impact on variances 1.Production department gets low quality material which was ordered by the purchase department. 2.Person in the department of production not handling materials well 3.It was decided by the company to use new suppliers 4.Sales of the product has dropped from 25 to 20% 5.Due to demand in market, a new competitor has also entered in to the market 6.Production of units was more than budgeted
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.
Explain with correct reasons in each of the following: Impact on variances
1.Production department gets low quality material which was ordered by the purchase department.
2.Person in the department of production not handling materials well
3.It was decided by the company to use new suppliers
4.Sales of the product has dropped from 25 to 20%
5.Due to demand in market, a new competitor has also entered in to the market
6.Production of units was more than budgeted
Step by step
Solved in 4 steps
