Problem 6. Highland Coffee Company is concerned with its gross profit negating the increase of its sales. It presents the following data for two species of coffee, Arabica and Robusta, for 2020 and 2019: 2020 2019 Kilos Price/Kg. Amount Kilos Price/Kg. Amount Net sales Arabica 12,000 P390 P4,680,000 10,500 P400 P4,200,000 Robusta 10,000 360 3,600,000 8,280,000 11,000 330 3.630,000 7,830,000 Totals Cost of goods sold Arabica 320 3,840,000 350 3,675,000 Robusta 300 3,000,000 240 2,640,000 Totals 6,840,000 6,315,000 P1,440,000 Required: Calculate and analyze the gross profit variance. Gross profit P1,515.000

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Q: compute the gross profit percentage

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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.