manufacturing departments had the following operating and cost information for the two most recent months of activity: May June Units produced 10,000 20,000 Costs in each department Department A $ 10,000 $ 10,000 Department B 25,000 50,000 Department C 35,000 45,000 Department D 18,000 30,000 Department E 22,000 44,000 Required: Identify whether the cost in each department is fixed, variable, or mixed.
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.
Adams Manufacturing’s five manufacturing departments had the following operating and cost information for the two most recent months of activity:
| May | June | |
|---|---|---|
| Units produced | 10,000 | 20,000 |
| Costs in each department | ||
| Department A | $ 10,000 | $ 10,000 |
| Department B | 25,000 | 50,000 |
| Department C | 35,000 | 45,000 |
| Department D | 18,000 | 30,000 |
| Department E | 22,000 | 44,000 |
Required:
Identify whether the cost in each department is fixed, variable, or mixed.
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