Problem:
Eggscell Ltd has produced budget and actual information for one of its business units for the previous month. This information is shown in . Eggscell Ltd.
|
Budget
|
Actual
|
|
Analysis of labour
|
|
|
|
Number of hours
|
10,000
|
9000
|
|
Average rate per hour
|
$75
|
$80
|
a. Show how a traditional budget versus actual variance report would be presented to the manager of this business unit.
b. Use a flexed budget to present an actual versus budget comparison.
c. Explain how the use of a flexed budget provides variance information that is more meaningful to managers.