The manufacturing costs of Rosenthal Industries for the first three months of the year follow: Total Costs Units Produced January $1,890,000 22,500 units February 2,800,000 35,000 March 4,230,000 55,000 Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.
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
manufacturing costs of Rosenthal Industries for the first three months of the year follow:
|
Total Costs |
Units Produced |
|
|
January |
$1,890,000 |
22,500 units |
|
February |
2,800,000 |
35,000 |
|
March |
4,230,000 |
55,000 |
- Using the high-low method, determine (a) the variable cost per unit and (b) the total fixed cost.
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