A company manufactures one product, and the following infor mation refers to the budget and actual data for that product:
|
Sales and production units
|
Budget 30,000
|
Actual
28,000
|
|
Selling price per unit (£)
|
280
|
270
|
|
Direct materials
|
£'000
|
£'000
|
|
1O kg per unit at £8 per kg 252,000 kg at £9 per kg Direct labour
8 hours per unit at £7 per hour
|
2400
1,680
|
2,268
|
|
196,000 hours at £7 per hour
|
|
1,372
|
|
Variable production overheads
|
1,200
|
1,110
|
|
Fixed production overheads
|
2,100
|
2,100
|
You are required to:
(a) Flex the budget to take into account the actual level of output and provide an explanation of the difference between the original budget and the flexed budget.
(b) Provide a variance analysis which explains the difference between the flexed budget profit and the actual profit.