Writer One Inc. manufactures ball point pens that sell at wholesale for $0.80 per unit. Budgeted production in both 2018 and 2019 was 14,500 units. There was no beginning inventory in 2018. The following data summarized the 2018 and 2019 operations: 2018 2019 Units sold 13,000 12,500 Units produced 14,500 13,500 Costs: Variable factory overhead per unit $ 0.15 $ 0.15 Fixed factory overhead $ 2,900 $ 2,700 Variable marketing per unit $ 0.30 $ 0.30 Fixed Selling and Administrative $ 320 $ 320 Full costing operating income for 2019 is calculated to be: (Do not round intermediate calculations. Round your final answers to whole dollar amounts.) Multiple Choice $225. $655. $1,555. $2,150. $1,780.
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.
Writer One Inc. manufactures ball point pens that sell at wholesale for $0.80 per unit. Budgeted production in both 2018 and 2019 was 14,500 units. There was no beginning inventory in 2018. The following data summarized the 2018 and 2019 operations:
| 2018 | 2019 | |||||
| Units sold | 13,000 | 12,500 | ||||
| Units produced | 14,500 | 13,500 | ||||
| Costs: | ||||||
| Variable factory |
$ | 0.15 | $ | 0.15 | ||
| Fixed factory overhead | $ | 2,900 | $ | 2,700 | ||
| Variable marketing per unit | $ | 0.30 | $ | 0.30 | ||
| Fixed Selling and Administrative | $ | 320 | $ | 320 | ||
Full costing operating income for 2019 is calculated to be: (Do not round intermediate calculations. Round your final answers to whole dollar amounts.)
-
$225.
-
$655.
-
$1,555.
-
$2,150.
-
$1,780.
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