Carla Vista Manufacturing Company makes specialty tools. In January, Carla Vista incurs manufacturing costs of $12,480,000 for direct material, direct labor, and overhead. 20% of the total costs represents overhead applied. The overhead rate is $1 for every $2 of direct labor costs incurred. Inventory balances were: Raw Materials Work in Process Finished Goods January 1 $288,000 576,000 384,000 January 31 $480,000 384,000 192,000 At the end of January, there was $960 of overapplied overhead.

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 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 t…