The management accountant of a business is calculating the monthly variances to review and control performance.The company makes and sells one product and uses full absorption costing.The product has the following standard costs per unit:Direct materials £15 Direct labour £10 Production overhead £6The company planned to sell 1,000 units at a price of £50.Actual sales were 1,150 units and a total revenue of £56,350What was the sales volume profit variance for the month, stating clearly whether it was favourable or adverse?
The management accountant of a business is calculating the monthly variances to review and control performance.The company makes and sells one product and uses full absorption costing.The product has the following standard costs per unit:Direct materials £15 Direct labour £10 Production overhead £6The company planned to sell 1,000 units at a price of £50.Actual sales were 1,150 units and a total revenue of £56,350What was the sales volume profit variance for the month, stating clearly whether it was favourable or adverse?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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The management accountant of a business is calculating the monthly variances to review and control performance.The company makes and sells one product and uses full absorption costing.The product has the following standard costs per unit:Direct materials £15
Direct labour £10
Production overhead £6The company planned to sell 1,000 units at a price of £50.Actual sales were 1,150 units and a total revenue of £56,350What was the sales volume profit variance for the month, stating clearly whether it was favourable or adverse?
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