XYZ Company manufactures a unique device that is used by internet users to boost Wi-fi signals. The following data relates to the first month of operation: Beginning inventory 0 units Units produced 40,000 units Units sold 35,000 units Selling price $120 per unit Marketing and administrative expenses Variable marketing and administrative expenses per unit $4 Fixed marketing and administrative expenses per month $
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.
XYZ Company manufactures a unique device that is used by internet users to boost Wi-fi signals. The following data relates to the first month of operation:
|
Beginning inventory |
0 units |
|
Units produced |
40,000 units |
|
Units sold |
35,000 units |
|
Selling price |
$120 per unit |
|
Marketing and administrative expenses |
|
|
Variable marketing and administrative expenses per unit |
$4 |
|
Fixed marketing and administrative expenses per month |
$1,120,000 |
|
|
|
|
Direct materials cost per unit |
$30 |
|
Direct labor cost per unit |
$14 |
|
Variable manufacturing |
$4 |
|
Fixed manufacturing overhead cost per month |
$1,280,000 |
Using the information given, above:
Calculate unit product cost under the variable costing method and the absorption costing method
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