The operating profit for next year would be: A $477,500. B $492,500. C $831,250. D $552,500.
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.
| Sales | $ | 3,500,000 | |||
| Cost of sales: | |||||
| Direct Material | $ | 500,000 | |||
| Direct labor | 250,000 | ||||
| Variable Overhead | 275,000 | ||||
| Fixed Overhead | 600,000 | 1,625,000 | |||
| Gross Profit | $ | 1,875,000 | |||
| Selling and General & Admin. Exp. | |||||
| Variable | 750,000 | ||||
| Fixed | 250,000 | 1,000,000 | |||
| Operating Income | $ | 875,000 |
The operating profit for next year would be:
| A |
$477,500.
|
|
| B |
$492,500.
|
|
| C |
$831,250.
|
|
| D |
$552,500.
|
2) Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period:
| Total Company | Southern Division | Northern Division | ||||||
| Sales | $ | 418,000 | $ | 193,000 | $ | 225,000 | ||
| Variable expenses | $ | 130,880 | $ | 79,130 | $ | 51,750 | ||
| Traceable fixed expenses | $ | 186,000 | $ | 77,000 | $ | 109,000 | ||
| Common fixed expense | $ | 79,420 | $ | 36,670 | $ | 42,750 |
The common fixed expenses have been allocated to the divisions on the basis of sales.
The company's overall break-even sales is closest to:
| A |
$114,341
|
|
| B |
$328,299
|
|
| C |
$272,067
|
|
| D |
$386,408
|
Step by step
Solved in 2 steps
