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Conduct a variance analysis for LMN Corporation by cost element using the following data: Cost Element Budgeted Amount ($) Actual Amount ($) Direct Materials $50,000
Conduct a variance analysis for LMN Corporation by cost element using the following data:
Cost Element | Budgeted Amount ($) | Actual Amount ($) |
---|---|---|
Direct Materials | $50,000 | $55,000 |
Direct Labor | $30,000 | $28,000 |
Manufacturing Overhead | $40,000 | $42,000 |
Requirements:
- Calculate the variance for each cost element.
- Analyze the variances into favorable and unfavorable components.
- Present the analysis in a detailed table format.
- Discuss potential reasons for budget variances and recommend corrective actions.
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