project (direct materials, direct labor, and overhead) are multiplied by 140% to determine the amount of the billing. The difference between the billed amount and the accumulated cost is the “plus” in cost plus. During March, Flanigan accumulated the following information related to Job 295 for Johnson Creek City: Senior engineer hours Level 1 . . . . . . . . . . . . . . . . . . . . . . . . 52 Level 2 . . . . . . . . . . . . . . . . . . . . . . . . 84 Associate engineer hours Level 3 . . . . . . . . . . . . . . . . . . . . . . . . 106 Level 4 . . . . . . . . . . . . . . . . . . . . . . . . 44 Clerical hours Level 5 . . . . . . . . . . . . . . . . . . . . . . . . 20 Level 6 . . . . . . . . . . . . . . . . . . . . . . . . 66 Building permits . . . . . . . . . . . . . . . . $1,500 Airline travel and motel . . . . . . . . . . $865 How much profit was earned on Job 295 during March?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
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.
Elizabeth Flanigan and Associates is an engineering and design firm that specializes in developing plans for recycling plants for municipalities. The firm uses a
Senior engineer
Level 1: $44,000 per year ($22 per hour)
Level 2: $36,000 per year ($18 per hour)
Associate engineer Level 3: $30,000 per year ($15 per hour)
Level 4: $24,000 per year ($12 per hour) Clerical staff
Level 5: $16,000 per year ($8 per hour)
Level 6: $14,500 per year ($7.25 per hour)
The billings that are sent to the municipalities for engineering services utilize cost-plus billing. Typically, the total costs accumulated for a project (direct materials, direct labor, and overhead) are multiplied by 140% to determine the amount of the billing. The difference between the billed amount and the accumulated cost is the “plus” in cost plus. During March, Flanigan accumulated the following information related to Job 295 for Johnson Creek City: Senior engineer hours
Level 1 . . . . . . . . . . . . . . . . . . . . . . . . 52
Level 2 . . . . . . . . . . . . . . . . . . . . . . . . 84
Associate engineer hours
Level 3 . . . . . . . . . . . . . . . . . . . . . . . . 106
Level 4 . . . . . . . . . . . . . . . . . . . . . . . . 44
Clerical hours Level 5 . . . . . . . . . . . . . . . . . . . . . . . . 20
Level 6 . . . . . . . . . . . . . . . . . . . . . . . . 66
Building permits . . . . . . . . . . . . . . . . $1,500
Airline travel and motel . . . . . . . . . . $865
How much profit was earned on Job 295 during March?
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