Sakto Company provides the following production data: Total standard overhead cost per unit of product: 6 hours at P3.00 per hour = P18.00 per unit Budgeted Fixed Factory Overhead P24,000 Normal Production 2,000 units Actual Production 2,000 units Actual Hours 8,000 hours Actual Factory Overhead incurred P24,000 Required:
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.
Factory
Sakto Company provides the following production data:
Total
|
Budgeted Fixed Factory Overhead |
P24,000 |
|
Normal Production |
2,000 units |
|
Actual Production |
2,000 units |
|
Actual Hours |
8,000 hours |
|
Actual Factory Overhead incurred |
P24,000 |
Required:
REQUIRED:
- Determine the Flexible Budget Formula
- Spending Variance (SV)
- Efficiency Variance (EV)
- Volume Variance (VV)
- Total Factory Overhead Variance (TFOV)
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