ssume a manufacturing company provides the following information from its master budget for the month of May: Unit sales 6,100 Selling price per unit $ 50 Direct materials cost per unit $ 18 Direct labor cost per unit $ 15 Predetermined overheard rate (based on direct labor dollars) 80% If the company maintains no beginning or ending inventories, what is the budgeted gross margin for May
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.
Assume a manufacturing company provides the following information from its
| Unit sales | 6,100 |
|---|---|
| Selling price per unit | $ 50 |
| Direct materials cost per unit | $ 18 |
| Direct labor cost per unit | $ 15 |
| Predetermined overheard rate (based on direct labor dollars) | 80% |
If the company maintains no beginning or ending inventories, what is the budgeted gross margin for May?
· Ratio analysis used to identify the business performance of the company.
· It is used to measure the financial ability of the company.
· It is used by investors to assess the paying ability of the company.
· It plays a vital role in every business.
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