Problem 2 The following income statement data presented by VGP Company for the years ended December 31, 2020 and 2021: 2020 2021 600,000 360,000 240,000 Net Sales 699,600 380,160 Cost of Sales Gross Margin 319,440 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

Q: what are the possible causes of favourable Wage rate variance

A: Labor or wage Rate variance: The labor rate variance measures the difference between the actual and…

Q: How do you decide if the variance is favorable or unfavorable?

A: The discrepancy between budgeted and actual amounts is known as a "variance" in the accounting…

Q: What is the expected return? What is the variance? What is the standard deviation?

A: State Probability Returns       Boom 0.25 0.15 Normal 0.50 0.08 Slow down 0.15 0.04…

Q: Explain favourable variance.

A: Definition:   Variance analysis: Variance analysis is the process of evaluating the differences…

Q: Calculate the following and determine if variances are favorable

A: Compute the total standard material cost.

Q: Explain the term flexible budget variance.

A: Flexible Budget: It is a type of budget that changes based on the volume of business activity.…

Q: Variance analysis would be appropriate to measure performance ina. profit centers.b. investment…

A: Variance analysis is a method used in business and financial management to assess and analyze the…

Q: Define variance

A: Variance in statistics is the calculation of the distribution in an information source between the…

Q: Variance percentage is calculated by dividing the choose your answer... by the choose your answer...

A: Variation refers to the difference i.e. the difference between the current amounts with the budgeted…

Q: Distinguish between a favorable variance and an unfavorable variance.

A: Favorable Variance: Favorable variance is the variation in the actual and planned output which is…

Q: activity of 17,100 hours: Direct Materials (6 ft. x $5/ft) Direct Labor (1.6 hrs.x $10/hr)…

A: Standard Price = $10  Actual Production = 12,100  Standard hours  for actual Production  = actual…

Q: Differentiate between variance analysis and sensitivity analysis

A: Managers of small businesses can benefit from both variance and sensitivity analyses when trying to…

Q: criticly identify the possible causes of labour and material variance

A: Labour Variances: 1. Unskilled or inefficient workers. 2. Unfavourable wage rates. 3. Unexpected…

Q: How do you find the standard quantity for efficiency variance?

A: Management should pay particular attention to those that are uncommon or noteworthy. Firms may…

Q: Define unfavourable variance.

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

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.