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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 ElementBudgeted 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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