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A company has prepared the following fixed budget for the coming year.
Sales 10,000 units
Production 10,000 units
$
Direct materials 50,000
Direct labour 25,000
Variable overheads 12,500
Fixed overheads 10,000
$97,500
Budgeted selling price $10 per unit.
At the end of the year, the following costs had been incurred for the actual production of 12,000
units.
$
Direct materials 60,000
Direct labour 28,500
Variable overheads 15,000
Fixed overheads 11,000
$114,500
The actual sales were 12,000 units for $122,000
(a) Prepare a flexed budget for the actual activity for the year
(b) Calculate the variances between actual and flexed budget, and summarise in a form
suitable for management.
(Use a marginal costing approach)Please do not simply type out a full question and expect to be provided with a full answer!
You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.Have you not watched my free lectures, because everything needed to be able to answer this question is covered in my lectures? The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
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