ina Colada Company expects to produce 1.224,000 units of Product XX in 2022. Monthly production is expected to range from 81.600 to 122.400 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead 58. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. March 2022, the company incurs the following costs in producing 102,000 units: direct materials $530,400, direct labor $607,920, and variable overhead $821,100. Actual fixed costs were equal to budgeted fixed costs. repare a flexible budget raport for March (List variable costs before fixed costs) Units Produced Variable Costa Direct Materials Direct Labor Overhead Total Variable Cost Fixed Costs Budget $1600 408000 409600 632000 1550400 PINA COLADA COMPANY Manufacturing Flexible Budget Report For the Month Ended March 31, 2022 ✓ Actual 100000 $10000 412000 $16000 1930000 Difference Favorable Unfavorable Neither Favorable nor Unfavorable 102000 122400 163200 387600 Favorabl Favorable Favorab
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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