The costs of energy consumed in producing good units in the Baking Department of Pan Company were $14,875 and $14,615 for June and July, respectively. The number of equivalent units produced in June and July was 42,500 pounds and 39,500 pounds, respectively.Evaluate the change in the cost of energy between the two months.
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 costs of energy consumed in producing good units in the Baking Department of Pan Company were $14,875 and $14,615 for June and July, respectively. The number of equivalent units produced in June and July was 42,500 pounds and 39,500 pounds, respectively.
Evaluate the change in the cost of energy between the two months.
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