W Ltd has budgeted sales of 650 units but actually sold only 600 units .Its standard cost card is as follows: Direct material $50 Direct wages $16 Variable overhead $8 Fixed cost $38 Total Standard cost 110 Standard gross profit 10 Standard selling price 120 Actual selling price 122 Required: Calculate the sales variance and sales volume for the period . Using the absorption costing method.
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.
W Ltd has budgeted sales of 650 units but actually sold only 600 units .Its
Direct material $50
Direct wages $16
Variable
Fixed cost $38
Total Standard cost 110
Standard gross profit 10
Standard selling price 120
Actual selling price 122
Required: Calculate the sales variance and sales volume for the period . Using the absorption costing method.
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