Jordan Manufacturing Company established the following standard price and cost data. Sales price $ 8.50 per unit Variable manufacturing cost $ 3.60 per unit Fixed manufacturing cost $ 2,300 total Fixed selling and administrative cost $ 700 total Jordan planned to produce and sell 2,500 units. Actual production and sales amounted to 2,700 units. Required Determine the sales and variable cost volume variances. Classify the variances as favorable (F) or unfavorable (U). Determine the amount of fixed cost that will appear in the flexible budget. Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activit
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.
Jordan Manufacturing Company established the following standard price and cost data.
Sales price | $ | 8.50 | per unit |
Variable |
$ | 3.60 | per unit |
Fixed manufacturing cost | $ | 2,300 | total |
Fixed selling and administrative cost | $ | 700 | total |
Jordan planned to produce and sell 2,500 units. Actual production and sales amounted to 2,700 units.
Required
- Determine the sales and variable cost volume variances.
- Classify the variances as favorable (F) or unfavorable (U).
- Determine the amount of fixed cost that will appear in the flexible budget.
- Determine the fixed cost per unit based on planned activity and the fixed cost per unit based on actual activity.
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