The following data is the cost information for company A over a period for output level of 10000units; direct materials-2kg @ GH¢5/kg, direct labour- 2hours @ GH¢20/hour, production overheads of GH¢40000, supervisors’ salary amounting to GH¢30000. The company also has a machine at cost of GH¢100000 to be used for ten years. The accountant identifies that one-third of supervisors’ salary varies with output levels whiles 60% of production overheads remains constant as output changes. Using the accounts classification method, the total variable and total fixed costs are
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.
The following data is the cost information for company A over a period for output level of 10000units; direct materials-2kg @ GH¢5/kg, direct labour- 2hours @ GH¢20/hour, production
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
