Finch Company began its operations on March 31 of the current year. Finch has the following projected costs: April May June Manufacturing costs* $155,300 $195,700 $207,800 Insurance expense** 860 860 860 Depreciation expense 2,050 2,050 2,050 Property tax expense*** 450 450 450 *Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month.**Insurance expense is $860 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October).***Property tax is paid once a year in November. The cash payments expected for Finch Company in the month of May are a.$185,600 b.$224,425 c.$38,825 d.$146,775
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.
Finch Company began its operations on March 31 of the current year. Finch has the following projected costs:
| April | May | June | |
| $155,300 | $195,700 | $207,800 | |
| Insurance expense** | 860 | 860 | 860 |
| Depreciation expense | 2,050 | 2,050 | 2,050 |
| Property tax expense*** | 450 | 450 | 450 |
*Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month.
**Insurance expense is $860 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October).
***Property tax is paid once a year in November.
The cash payments expected for Finch Company in the month of May are
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