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Kamal Co has produced the following performance analysis for the January to March quarter during which no changes were made to the specification of its product.
Number of units:Budget $6,000, Actual $7200
Revenue 540,000 633,600
Labour (48,000) (58,716)
Materials (210,000) (205,000)
FO (69,000) (79,500)
Profit 213,000 290,384
As a result of the results in January to March, Kamal Co reconsidered its approach to budgeting and adopted a form of rolling budgeting, starting in April for the next twelve months. The budgeted figures for the remainder of the year before the rolling budget was introduced were as follows:
Kamal Co amended the budget so that budgeted sales for April-June were 20% higher than in the original budget, and then increased by 5% in July-September and October-December. It did not subsequently amend the budget for July-September. Actual sales for July-September were
Calculate the difference in the total sales operational variance, using the original budgeted and revised (rolling) budgeting figures.
1. The answer is $133,000
2. How to obtain the answer? ( the working is a bit confusing to understand?
Add 20% to the original April-June budget, and then add another 5% to this to get the revised July-September budget. This gives a revised budget for July- September of $693,000.
The difference between the original (560,000) and the revised (693,000) is 133,000.