Problem:
Gargantua plc has produced budget and actual information in. Gargantua budget and actual.
|
Budget
|
Actual
|
|
Sales units
|
10,000
|
11,000
|
|
Price per unit
|
£37.10
|
£36
|
|
Direct materials
|
|
|
|
Magna - per unit
|
4 kg @ £1.50/kg
|
46,500 kg - cost £67,425
|
|
Carta - per unit
|
1 kg @ £5/kg
|
11,500 kg - cost £58,650
|
|
Labour - per unit
|
2.5 hours @ £7
|
26,400 hours - cost £187,440
|
|
Fixed costs
|
£75,000
|
£68,000
|
a. Prepare a traditional budget versus actual report using the above figures.
b. Prepare a flexible budget for Gargantua.
c. Calculate all sales and cost price and efficiency variances.
d. Reconcile the original budget and actual profit figures by showing the effect of the variance analysis.