Raw materials and components 2,950,000 yen Insurance, plant . 600,000 Electricity, machinery. 120,000 Electricity, light 60,000 Engineering design 610,000 Depreciation, plant 700,000 Depreciation, machinery 1,400,000 Custodial wages, plant . 40,000 Equipment maintenance, wages 150,000 Equipment maintenance, parts . 30,000 Setup wages 40,000 Inspection of finished goods 30,000 Property taxes 120,000 Natural gas, heating 30,000
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.
Kentaro Corporation manufactures Digital Video Recorders (DVRs) in its Tokyo plant. The following costs are budgeted for January. (Yen is the Japanese monetary unit.)
Required: Divide these costs into activity cost pools, and identify a cost driver for assigning each pool of costs to products. Calculate the total cost in each activity cost pool.
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