MARISSA Co., the consultant of MARISOL Co. had summarized the following standard cost data extracted from the historical records and performance reports issued by the cost accounting department in the prior year to assist in her analysis and evaluation of the standard costing policy of the company: Input required per unit 6 kg per unit 5 hours per unit Standard cost per unit Standard cost per unit P90 per kg P50 per hour Direct Materials P540 Direct Labor P250 Other information follows: Budgeted factory overhead for the year: Variable 480,000 600,000 Fixed The company's normal capacity per month is 400 units Actual cost materials purchased for the year is P2,342,000 During the year, direct materials purchased is 26,880 kg while direct materials actually used is 24,760 kgs Actual labor costs for the year 1,080,000 of which 24,900 direct labor hours was consumed Actual factory overhead amounted to 1,320,000, 65% of which is fixed cost, FOH is based on labor hours Actual production during the year 5,150 units

Q: How does the variable cost per unit change as the level of activity (or cost driver) increases? Why?

A: A variable cost changes is directly proportional to the change in the level of activity or cost…

Q: Q.How do managers plan for variable overhead costs?

A: The cost which is dependent upon the level of output and changes if the level of output fluctuates…

Q: Define sales volume variance.

A: Sales volume variance (also known as sales quantity variance) occurs when the actual quantity of…

Q: What is meant by an activity base when dealing with variable costs? Give several examples of…

A:

Q: Cost estimation is the process of   a. Summarizing pwst costs into fixed variable components.…

A: Solution: Cost estimation is the process of "Estimating the relationship between costs and the costs…

Q: How does the planning of fixed overhead costs differ from the planning of variable overhead costs?

A: Variable cost: The cost which fluctuates on the basis of the output level produced. The variable…

Q: A graph that provides a visual representation of the relationship between total cost and activity…

A: The scattergraph provides a visual depiction of how changes in one variable may be connected to…

Q: Which do you think is more important for controlling fixed overhead costs: the spending variance or…

A: (This is not a subjective matter of opinion but rather is based on accounting principles and theory…

Q: Explain the difference between the variable and absorption costing methods.

A: Under Variable Costing method, only variable costs are considered which includes only variable cost…

Q: Explains the effect on profit of using variable (marginal) and absorption costing.

A: The income statement can be prepared using various methods as absorption costing and variable…

Q: significant of variance analysis in cost management.

A: Variance analysis is a tool in cost management to compare and analyze variations in budgeted costs…

Q: Timing is the key in distinguishing between absorption and variable costing. Explain this statement.

A: Definition: Variable costing: It refers to the method of product costing in which the price of the…

Q: how to compute quantity/efficiency variance

A: Cost accounting is beneficial since it can demonstrate where a corporation spends money, earns…

Q: Describe management’s use of absorption and variable costing.

A: Absorption costing is also known as Full absorption costing. It is one of the managerial accounting…

Q: Explain the following concepts: indirect materials Mixed cost Budgeting Margin of safety

A: The total manufacturing cost of the product is determined by including the direct material, labor,…

Q: Explain variable overhead costs.

A: Variable Costing: “Variable costing is a method that allocates only variable manufacturing costs to…

Q: Identify the costs included under variable costing.

A: The costs can be distinguished as variable and fixed costs.

Q: Types of Fixed and Variable cost with the help of example and graph?

A: Costs are the total spent amount for the expenditures and for producing the goods and services.…

Q: Is there a benefit behind using either FIFO, LIFO, or the weighted average costing method?

A: Yes, there are benefits to using each of the three inventory costing methods - FIFO…

Q: Explain direct labour efficiency variance.

A: Variance: Variance refers to the difference level in the actual cost incurred and standard cost. The…

Q: Describe planning for variable overhead costs.

A: Variable Cost: The cost which is not fixed is called a variable cost. This cost is directly…

Q: a. What problems are associated with using the average cost per unit as a performance measure? b.…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: In the cost equation TC = F + VX, “V” is best described as the:    Multiple Choice   intercept…

A: The objective of the question is to identify the correct description of 'V' in the cost equation TC…

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.