ne following:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Topic Video
Question
Cost price variance
Cost volume variance
Total gross profit variance
Transcribed Image Text:Determine the following:
Problem 2
The following income statement data presented by VGP Company for the years
ended December 31, 2020 and 2021:
2020
2021
Net Sales
600,000
699,600
Cost of Sales
360,000
380,160
319,440
Gross Margin
240,000
Additional data:
During 2021, the following transpired that affected net sales, cost of sales, which
contributed in the changes in gross margin:
a. Units sold in 2021 was 10% higher than 2020
b. Units selling price in 2021 was 6% higher than 2020
c. Unit cost in 2021 was 4% lower than 2020
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