Assume a company has only one service department and one operating department. The service department’s budgeted and actual fixed costs for the period were $100,000 and $110,000, respectively. The peak-period units of service
Variance Analysis
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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.
Assume a company has only one service department and one operating department.
The service department’s budgeted and actual fixed costs for the period were $100,000 and $110,000, respectively.
The peak-period units of service required by the operating department was 50,000 units.
The actual units of service used by the operating department was 40,000 units.
How much of the service department’s fixed costs should not be charged to the operating department?
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