Sky High Company manufactures toy airplanes. Information on Sky High Company's labor costs follow: Sales commissions $5 per plane Administration $10,000 per month Indirect factory labor $3 per plane Direct factory labor $5 per plane The following information applies to the upcoming month of July for Sky High Company: Budgeted production 1,200 units Budgeted sales 1,000 units What amount of budgeted labor cost would appear in the July selling, general, and administrative expense budget? a. $10,000 b. $16,000 c. $15,000 d. $23,000
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.
Sky High Company manufactures toy airplanes. Information on Sky High Company's labor costs follow:
Sales commissions $5 per plane
Administration $10,000 per month
Indirect factory labor $3 per plane
Direct factory labor $5 per plane
The following information applies to the upcoming month of July for Sky High Company:
Budgeted production 1,200 units
Budgeted sales 1,000 units
What amount of budgeted labor cost would appear in the July selling, general, and administrative expense budget?
a. $10,000
b. $16,000
c. $15,000
d. $23,000
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