The following monthly budgeted cost values have been taken from the budget working papers of Maju Sdn Bhd for the year ended 30 August 2015.
Activity level 60% 70% 80%
RM RM RM
Direct materials 30,000 35,000 40,000
Direct labour 40,500 47,250 54,000
Production overhead 46,000 52,000 58,000
Selling overhead 15,000 17,000 19,000
Administration overhead 28,000 28,000 28,000
159,500 179,250 199,000
During August 2015, actual activity was 1,292 units (which was equal to 68% activity)
RM
Direct materials 33,500
Direct labour 44,000
Production overhead 46,250
Selling overhead 16,150
Administration overhead 27,800
167,700
Required:
Problem (i) Prepare a budgetary control statement for Maju Sdn. Bhd. on a flexible budget basis for the month of August.
Problem (ii) Explain the difference between fixed and flexible budgets, and state when each should be used to control costs.
Problem (iii) Briefly explain two (2) budget method that can be use by Maju Sdn Bhd. other than fixed and flexible