Caltex Products plc manufactures electric mini-lawnmowers. Its sales and costs’ budget for November 20X2 is as follows:   Sales: 3 000 units × £72/unit   Costs: Direct materials (metal):  3 000 units × (1kg per unit × £14/kg) Direct materials (plastic): 3 000 units × (0.5kg per unit × £7/kg) Direct labour: 3 000 units × (0.75 hours per unit × £8/hr)  Production overhead:  £86 500 Other overheads: £31 000   The company does not absorb production overheads using an overhead absorption rate.  It may be assumed that all of its overheads are fixed in nature. The company’s actual results for the same month (November) are as follows: Sales: 2 950 units × £73/unit  Costs: Direct materials (metal): 2 950 units × (0.9kg per unit × £13.80/kg)   Direct materials (plastic): 2 950 units × (£0.5kg per unit × £7.20/unit) Direct labour: 2 950 units × (0.7 hrs per unit × £8.20/hr) Production overhead: £84 250 Other overheads: £32 250 Net profit: £34 658     Required: a. i)  Produce a budget statement for Caltex for November  ii)  Produce a profit statement for Caltex for November

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Caltex Products plc manufactures electric mini-lawnmowers. Its sales and costs’ budget for November 20X2 is as follows:

 

Sales: 3 000 units × £72/unit

 

Costs:
Direct materials (metal):  3 000 units × (1kg per unit × £14/kg)

Direct materials (plastic): 3 000 units × (0.5kg per unit × £7/kg)

Direct labour: 3 000 units × (0.75 hours per unit × £8/hr) 

Production overhead:  £86 500

Other overheads: £31 000

 

  • The company does not absorb production overheads using an overhead absorption rate. 
  • It may be assumed that all of its overheads are fixed in nature.
    The company’s actual results for the same month (November) are as follows: Sales: 2 950 units × £73/unit 

Costs:
Direct materials (metal): 2 950 units × (0.9kg per unit × £13.80/kg) 

 Direct materials (plastic): 2 950 units × (£0.5kg per unit × £7.20/unit)

Direct labour: 2 950 units × (0.7 hrs per unit × £8.20/hr)

Production overhead: £84 250

Other overheads: £32 250
Net profit: £34 658

 

 

Required:

a.

  • i)  Produce a budget statement for Caltex for November 
  • ii)  Produce a profit statement for Caltex for November 
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b.
Produce a flexed budget statement for Caltex for November

 

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