Shalom Company has provided the following data concerning its costs: Fixed cost per month Cost per hour 1 Administrative expenses 22,300 1.00 M 2 Depreciation 5,000 2.00 M 3 Supplies 6.00 V 4Rent 15,000 F 5 Utilities 4,700 3.50 M 6 Wages and salaries 24,100 35.00 M The company planned to work for 300 hours in February for P350 per hour. However, it worked 360 hours during that month, an activity level within its relevant range. Actual costs Supplies 1,700 Utilities 4,690 Depreciation 5,000 Rent 15,000 Administrative expenses 21,300 Wages and salaries 39,400 In your flexible budget performance report, identify the difference between budgeted and actual costs and indicate as favorable or unfavorable.
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.
- Shalom Company has provided the following data concerning its costs:
Fixed cost per month Cost per hour
1 Administrative expenses 22,300 1.00 M
2
3 Supplies 6.00 V
4Rent 15,000 F
5 Utilities 4,700 3.50 M
6 Wages and salaries 24,100 35.00 M
The company planned to work for 300 hours in February for P350 per hour. However, it worked 360 hours during that month, an activity level within its relevant range.
Actual costs
Supplies 1,700
Utilities 4,690
Depreciation 5,000
Rent 15,000
Administrative expenses 21,300
Wages and salaries 39,400
In your flexible budget performance report, identify the difference between budgeted and actual costs and indicate as favorable or unfavorable.
Supplies
Wages and salaries
Depreciation
Administrative expenses
Utilities
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