Question: Performing a variance analysis for a manufacturing process, the following data is provided: Category Actual ($) Budgeted ($) Direct Materials 25,000 20,000 Direct Labor 18,000
Performing a variance analysis for a manufacturing process, the following data is provided:
| Category | Actual ($) | Budgeted ($) |
|---|---|---|
| Direct Materials | 25,000 | 20,000 |
| Direct Labor | 18,000 | 16,000 |
| Variable Overhead | 12,000 | 10,000 |
| Fixed Overhead | 8,000 | 7,000 |
Your requirements are as follows:
- Calculate the total variance for each category.
- Analyze the variances into price and efficiency components.
- Present the analysis in a variance report format.
- Include a paragraph discussing potential causes of each variance.
- Provide recommendations for cost control based on the analysis.
- Summarize the impact of variances on the company's profitability.
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