Owl Manufacturing's variance report for the purchasing department was partially prepared by the company's intern. Unfortunately, the intern is on spring break this week and another accountant has been asked to complete the variance report. What amount should be reported under "Standard price" for sugar Raw material Quantity purchased Actual price Standard price Price variance Flour $12.48 $12.00 $13,200 ? Cocoa 7.92 2,520 U Sugar ? 880 F A $0.48 B C $0.74 $0.92 $1.00 ? lbs. 7,000 lbs. 22,000 lbs. ? 0.96
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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