A manufacturing plant sets standard costs for a product: Direct materials $20/unit, direct labor $10/unit, variable overhead $5/unit, fixed overhead $30,000. Actual production 5,000 units, actual costs incurred $180,000.

• Requirements:
  • Calculate the material, labor, and overhead variances using standard costing.
  • Analyze the causes of variances and recommend corrective actions.
  • Prepare a variance analysis report for management review.
  • Discuss how standard costing aids in cost control and performance evaluation.
  • Evaluate the impact of variance analysis on decision-making in the manufacturing plant.