Excell Electronics Sdn Bhd (EESB) manufacture an electronic appliances. The estimatedtotal production costs of the product is RM500,000 for production of 2000 units of itsproducts. In 2019, the production report show that a total of RM580,000 was spent toproduce 3000 of its products. As the production manager for EESB,(a) Discuss the situation faced by EESB from the variance analysis perspective. Justifyyour answers whether EESB is in trouble or not.(b) Suggest TWO (2) appropriate decision for EESB to proceed with their next yearproduction. Explain each suggestions.
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.
Excell Electronics Sdn Bhd (EESB) manufacture an electronic appliances. The estimated
total production costs of the product is RM500,000 for production of 2000 units of its
products. In 2019, the production report show that a total of RM580,000 was spent to
produce 3000 of its products. As the production manager for EESB,
(a) Discuss the situation faced by EESB from the variance analysis perspective. Justify
your answers whether EESB is in trouble or not.
(b) Suggest TWO (2) appropriate decision for EESB to proceed with their next year
production. Explain each suggestions.
Step by step
Solved in 2 steps
