The cost of energy consumed in producing good units in the Canning Department of Mandarin Orange Processing Company was $11,790 and $4,670 for March and April, respectively. The number of equivalent units produced in March and April was 85,000 and 44,000 liters, respectively. What is the cost of energy for the 2 months? a.$0.05 and $0.27 for March and April, respectively b.$0.14 and $0.11 for March and April, respectively c.$0.40 and $0.52 for March and April, respectively d.$0.11 and $0.14 for March and April, respectively
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.
The method for calculating the cost of one unit entails adding up the fixed costs and the variable costs and then dividing that amount by the number of units that were produced within a certain time period. Obtaining the cost per unit may be done as follows: Cost per unit = (Total fixed costs + Total variable costs) / Total units produced.
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