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Hello sir,
I have watched all your video lectures and they are absolutely great!. But I am a bit confused in finding flexed budget figures from a fixed and actual budget in this question.
Oswald press produces and sells textbooks for schools and colleges. The following budgeted information is given for the year ending 31 December 20×6.
Sales(units) Budget Actual
120,000 100,000
$000 $000
Sales revenue 1200 995
variable printing costs 360 280
variable production overheads 60 56
fixed production cost 300 290
fixed administration cost 360 364
profit 120 5
what does the budget show?
the answer is: a loss of $10,000
Sir ,in exam kit solution flexed budget is given as:
sales(units) 100,000
$000
Sales revenue 1000
variable printing costs 300
variable production overheads 50
fixed production cost 300
fixed administration cost 360
profit/loss (10)
please explain how variable printing, production overheads and sales revenue is calculated.Sorry for it to be appearing a bit messy!. I left enough space while typing the question but after submitting it appeared like this.
Given the the budgeted variable printing costs are 360 for 1,200 units, the budgeted cost per unit is 360/120,000 and the flexed budget for actual sales of 100,000 units is
100,000 x 360/120,000 = 300It is exactly the same logic for the sales revenue and for the variable production overheads.
I think it would be useful to watch the lecture on the flexing of budgets again 🙂
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