Laura, manager of Swifty Company, is using a variable costing system to evaluate the company's performance. The company uses standard costing and it budgeted to produce 7,200 units with a budgeted cost of $43,200 of fixed MOH and $22 per unit of variable manufacturing costs. Because of supply chain issues, the company was only able to produce 5,040 units with fixed MOH incurred of $30,744. However, the company did sell all the units produced, plus the 864 units in beginning inventory. Assuming no changes in costs from last year to this year, how much will Laura show on Swifty Company's report for its COGS this year? How much will be recognized for a fixed MOH volume variance? Cost of goods sold Fixed MOH volume variance $ $
Laura, manager of Swifty Company, is using a variable costing system to evaluate the company's performance. The company uses standard costing and it budgeted to produce 7,200 units with a budgeted cost of $43,200 of fixed MOH and $22 per unit of variable manufacturing costs. Because of supply chain issues, the company was only able to produce 5,040 units with fixed MOH incurred of $30,744. However, the company did sell all the units produced, plus the 864 units in beginning inventory. Assuming no changes in costs from last year to this year, how much will Laura show on Swifty Company's report for its COGS this year? How much will be recognized for a fixed MOH volume variance? Cost of goods sold Fixed MOH volume variance $ $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:Laura, manager of Swifty Company, is using a variable costing system to evaluate the company's performance. The company uses
standard costing and it budgeted to produce 7,200 units with a budgeted cost of $43,200 of fixed MOH and $22 per unit of variable
manufacturing costs. Because of supply chain issues, the company was only able to produce 5,040 units with fixed MOH incurred of
$30,744. However, the company did sell all the units produced, plus the 864 units in beginning inventory.
Assuming no changes in costs from last year to this year, how much will Laura show on Swifty Company's report for its COGS this year?
How much will be recognized for a fixed MOH volume variance?
Cost of goods sold
Fixed MOH volume variance
$
+A
$
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