CT Co uses a standard absorption costing system and manufactures and sells a single product called the DG. The standards cost and selling price details for the DG are as follows. $ per unit Variable cost 12 Fixed cost 4 16 Standard profit 6 Standard selling price 22 The sales volume variance reported in June was $12,000 adverse. CT Co is considering using standard marginal costing as the basis for variance reporting in the future. (a) Calculate the sales volume variance that would be shown in a marginal costing operating statement for June.
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.
CT Co uses a standard absorption costing system and manufactures and sells a single product called the
DG. The
$ per unit
Variable cost 12
Fixed cost 4
16
Standard profit 6
Standard selling price 22
The sales volume variance reported in June was $12,000 adverse.
CT Co is considering using standard marginal costing as the basis for variance reporting in the future.
(a) Calculate the sales volume variance that would be shown in a marginal costing operating
statement for June.
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