me Variance F.) Total Gross Profit Variance G.) Price Variance H.) Price-Quantity Variance I.) Cost Variance J.) Cost-Qua
me Variance F.) Total Gross Profit Variance G.) Price Variance H.) Price-Quantity Variance I.) Cost Variance J.) Cost-Qua
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Topic Video
Question
D.) Cost Price Variance
E.) Cost Volume Variance
F.) Total Gross Profit Variance
G.) Price Variance
H.) Price-Quantity Variance
I.) Cost Variance
J.) Cost-Quantity Variance
![The following Income Statement Data presented by AAA Company for the years ended
December 31, 2020 and 2021:
2020
2021
Net Sales
600,000
360,000
240,000
699,600
Cost of Sales
Gross Margin
380,160
319,440
Additional Data:
During 2021, the following transpired that affected Net Sales, Cost of Sales, which contributed
in the changes in Gross Margin:
Units Sold in 2021 was 10% higher than 2020
Units Selling Price in 2021 was 6% higher than 2020
Unit Cost in 2021 was 4% lower than 2020
Analyze if Favorable or Unfavorable.
A.) Sales Price Variance = 396,000 F
B.) Sales Volume Variance = 60,000 F
C.) Sales Variance = 996,000 F
D.) Cost Price Variance
E.) Cost Volume Variance
F.) Total Gross Profit Variance
G.) Price Variance
H.) Price-Quantity Variance
L.) Cost Variance
J.) Cost-Quantity Variance](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff2b98d3a-4106-4001-a7da-116011a00b74%2F82d88e1e-2aaa-4a2c-828b-6af1536d9284%2Frywax9t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The following Income Statement Data presented by AAA Company for the years ended
December 31, 2020 and 2021:
2020
2021
Net Sales
600,000
360,000
240,000
699,600
Cost of Sales
Gross Margin
380,160
319,440
Additional Data:
During 2021, the following transpired that affected Net Sales, Cost of Sales, which contributed
in the changes in Gross Margin:
Units Sold in 2021 was 10% higher than 2020
Units Selling Price in 2021 was 6% higher than 2020
Unit Cost in 2021 was 4% lower than 2020
Analyze if Favorable or Unfavorable.
A.) Sales Price Variance = 396,000 F
B.) Sales Volume Variance = 60,000 F
C.) Sales Variance = 996,000 F
D.) Cost Price Variance
E.) Cost Volume Variance
F.) Total Gross Profit Variance
G.) Price Variance
H.) Price-Quantity Variance
L.) Cost Variance
J.) Cost-Quantity Variance
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