Salem Screen Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2020 are as follows: The selling price per unit is $3,500. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,300 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. E (Click to view the data.) Read the requirements. Data table January February March (b). Prepare income statements for Salem Screen in January, February, and March 2020 under absorption costing. Unit data: Complete the top half of the income statement for each month first, then complete the bottom portion. (Enter a "0" for any zero balance accou not select a label. Abbreviation used; Adj. = Adjustment, Mfg. = Manufacturing.) Beginning inventory 150 150 Production 1,300 1,250 1,375 January 2020 February 2020 March 2020 Sales 1,150 1,250 1,380 Revenues Variable costs: Cost of goods sold: Manufacturing cost per unit produced $ 600 $ 600 $ 600 Beginning inventory Operating (marketing) cost per unit $ Variable manufacturing costs sold 475 $ 475 $ 475 Allocated fixed manufacturing costs Fixed costs: $ 533,000 $ 533,000 $ $ 110,000 $ 110,000 $ 110,000 Cost of goods available for sale Manufacturing costs 533,000 Deduct ending inventory Operating (marketing) costs Adj. for production-volume variance Cost of goods sold Gross margin
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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Thank you, how did you get the Adjusted Production Volume Variance?