Your company manufactures 40,000 units of a product over a period of time. The variable costs were SEK 240 each and the fixed costs amounted to SEK 8,000,000. the utilization rate was 125% during the period. a) Calculate the product's unit cost according to division calculation. Response: b) Calculate the unit cost of the product according to the normal calculation (normal year 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.
Your company manufactures 40,000 units of a product over a period of time. The variable costs were SEK 240 each and the fixed costs amounted to SEK 8,000,000. the utilization rate was 125% during the period.
a) Calculate the product's unit cost according to division calculation.
Response:
b) Calculate the unit cost of the product according to the normal calculation (normal year method).
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