ACME company has the following production costs for May: Units produced 2,000 Direct Material $20,000 Direct Labor 4,000 hrs @ $15 per hour Supplies $5,000 Rent $2,000 Depreciation $3,000 Supervision $8,000 In June they plan to produce 3,000 units. What is their production cost per unit for May and total production costs for June? a $49; $140,500 b $49; $147,000 c $43; $86,000 d $43; $129,000
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.
ACME company has the following production costs for May:
Units produced 2,000
Direct Material $20,000
Direct Labor 4,000 hrs @ $15 per hour
Supplies $5,000
Rent $2,000
Supervision $8,000
In June they plan to produce 3,000 units. What is their production cost per unit for May and total production costs for June?
a $49; $140,500
b $49; $147,000
c $43; $86,000
d $43; $129,000
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