The following information was drawn from the accounting records of Marlin Manufacturing Co. Product 1 Product 2 Product 3 Direct Material Cost $ 75,000 $ 80,000 $ 85,000 Direct Labor Cost $ 130,000 $ 140,000 $ 150,000 Direct Labor Hours 3,200 hours 3,800 hours 4,000 hours Factory overhead is estimated to be $315,000 and is applied on a basis of direct labor dollars. This overhead cost is not traceable to any particular product. The total cost of Product 1 is
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.
The following information was drawn from the accounting records of Marlin Manufacturing Co.
| Product 1 | Product 2 | Product 3 | |||||||
| Direct Material Cost | $ | 75,000 | $ | 80,000 | $ | 85,000 | |||
| Direct Labor Cost | $ | 130,000 | $ | 140,000 | $ | 150,000 | |||
| Direct Labor Hours | 3,200 | hours | 3,800 | hours | 4,000 | hours | |||
Factory overhead is estimated to be $315,000 and is applied on a basis of direct labor dollars. This overhead cost is not traceable to any particular product. The total cost of Product 1 is
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