Cinnamon Corp. started business in 2007 and uses the weighted average cost method.During 2007, it purchased 45,000 units of inventory at €10 each and sold 40,000 unitsfor €20 each. In 2008, it purchased another 50,000 units at €11 each and sold 45,000units for €22 each. Its 2008 cost of sales (€ thousands) was closest to:A. €490.B. €491.C. €495
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.
Cinnamon Corp. started business in 2007 and uses the weighted average cost method.
During 2007, it purchased 45,000 units of inventory at €10 each and sold 40,000 units
for €20 each. In 2008, it purchased another 50,000 units at €11 each and sold 45,000
units for €22 each. Its 2008 cost of sales (€ thousands) was closest to:
A. €490.
B. €491.
C. €495
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