At the end of March 2021, there were 700 units of a product manufactured by D & Y Manufacturing. The company has a budgeted capacity of 9,000 units and during the month, one unit of the product was sold for $800. Production and sales for the month amounted to 4,800 units and 8,500 units respectively. Administrative, selling and production overheads were estimated at $200,000, $275,000 and $540,000 respectively. The following information relating to the product was also extracted from the financial records:
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.
At the end of March 2021, there were 700 units of a product manufactured by D & Y Manufacturing. The company has a budgeted capacity of 9,000 units and during the month, one unit of the product was sold for $800. Production and sales for the month amounted to 4,800 units and 8,500 units respectively. Administrative, selling and production
Cost per unit
|
Details |
$ |
|
Direct materials |
300 |
|
Direct labour |
200 |
|
Variable overheads |
100 |
|
Total |
600 |
Required:
(a) Determine the amount of stock in store at the start of the month.
(b) Calculate the full cost per unit of production for March 2021.
(c) Prepare profit statement for the month using Marginal Costing.
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