Vijay Company reports the following information regarding its production costs. Compute its product cost per unit under absorption costing. Direct materials . . . . . . . . . . . . . . . . . . . . . $10 per unit Direct labor . . . . . . . . . . . . . . . . . . . . . . . . $20 per unit Units produced . . . . . . . . . . . . . . . . . . . . . 20,000 units Overhead costs for the year Variable overhead . . . . . . . . . . . . . . . . . $10 per unit Fixed overhead . . . . . . . . . . . . . . . . . . . $160,000
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.
Vijay Company reports the following information regarding its production costs. Compute its product cost
per unit under absorption costing. Direct materials . . . . . . . . . . . . . . . . . . . . . $10 per unit
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . $20 per unit
Units produced . . . . . . . . . . . . . . . . . . . . . 20,000 units
Overhead costs for the year
Variable overhead . . . . . . . . . . . . . . . . . $10 per unit
Fixed overhead . . . . . . . . . . . . . . . . . . . $160,000
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