The following is cost and production data for the Wave Darter: Per unit Variable manufacturing cost $ 400 Applied fixed manufacturing cost 250 * Absorption manufacturing cost 650 Variable selling and administrative cost 50 Allocated fixed selling and administrative cost 100 † Total cost $ 800 Variable manufacturing cost $ 400 Variable selling and administrative cost 50 Total variable cost $ 450 * Based on planned monthly production of 40 units (or 480 units per year). † Rounded. The target profit is $60,000, with planned sales equal to production. Use the general formula for determining a markup percentage to compute the required markup percentage using variable manufacturing cost. (Round your percentage answer to 2 decimal places (i.e., .1234 should be entered as 12.34).)
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 following is cost and production data for the Wave Darter:
| Per unit | |||||
| Variable |
$ | 400 | |||
| Applied fixed manufacturing cost | 250 | * | |||
| Absorption manufacturing cost | 650 | ||||
| Variable selling and administrative cost | 50 | ||||
| Allocated fixed selling and administrative cost | 100 | † | |||
| Total cost | $ | 800 | |||
| Variable manufacturing cost | $ | 400 | |||
| Variable selling and administrative cost | 50 | ||||
| Total variable cost | $ | 450 | |||
* Based on planned monthly production of 40 units (or 480 units per year).
† Rounded.
The target profit is $60,000, with planned sales equal to production.
- Use the general formula for determining a markup percentage to compute the required markup percentage using variable manufacturing cost. (Round your percentage answer to 2 decimal places (i.e., .1234 should be entered as 12.34).)
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