Kabota Company reports the following costing data on its product line for its first month of operations. During this first month, the company produced 500 riding lawn mowers and sold 450 units at a price of $650. Production costs Direct materials per unit $300 Direct labor per unit $150 Variable overhead per unit $30 Fixed overhead for the month $50,000 Selling and administrative costs Variable selling & administrative cost per unit $10 Fixed selling & administrative cost for month
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.
Kabota Company reports the following costing data on its product line for its first month of operations. During this first month, the company produced 500 riding lawn mowers and sold 450 units at a price of $650.
|
Production costs |
|
|
Direct materials per unit |
$300 |
|
Direct labor per unit |
$150 |
|
Variable |
$30 |
|
Fixed overhead for the month |
$50,000 |
|
Selling and administrative costs |
|
|
Variable selling & administrative cost per unit |
$10 |
|
Fixed selling & administrative cost for month |
$20,000 |
Determine its unit product cost under absorption costing. Specify to Dollars with no decimal places.
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