Y Limited produces one product. Budgeted units produced and sold for the month of July were 1000. Further budgeted information for July was also available. $ 250 000 (60 000) (100 000) (24 000) 66 000 Fixed overhead is to be absorbed on the basis of direct labour hours. The actual units produced and sold for July were 1120. Sales Direct material ($12 per kilo) Direct labour ($25 per labour hour) Fixed overhead Budgeted profit
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.
Calculate the following:
(i) sales price variance
(ii) sales volume variance
(iii) direct material total variance
(iv) direct labour total variance
(v) fixed
Step by step
Solved in 6 steps with 12 images
