Chimco is a limited company operating in the Hat making industry in East England. Below is a cost breakdown of their activities for the year 2020. Their business has been severely impacted by the Covid-19 lockdowns as they people were confined to their houses due to Government regulations. Items Cost per Actual (£) unit Units 000'00L Selling price 35 Revenue 000'000 Variable costs: Materials 3.50 380,000 Labour 540,000 Overhead 2.50 250,000 Contribution 24 1,830,000 Fixed overheads: Warehouse rental 350,000 200,000 Insurance 000'0 000'0 Fulltime supervisor 000'09 000' salary Profit 1,435,000 (i) Prepare the monthly control report showing original budget, flexed budget, and variances. (ii) Using your control report prepared in (i) above, prepare a report on Chimco's performance during the year 2020. (iii) Provide recommendations to Chimco's CEO on areas of improvement.
Chimco is a limited company operating in the Hat making industry in East England. Below is a cost breakdown of their activities for the year 2020. Their business has been severely impacted by the Covid-19 lockdowns as they people were confined to their houses due to Government regulations. Items Cost per Actual (£) unit Units 000'00L Selling price 35 Revenue 000'000 Variable costs: Materials 3.50 380,000 Labour 540,000 Overhead 2.50 250,000 Contribution 24 1,830,000 Fixed overheads: Warehouse rental 350,000 200,000 Insurance 000'0 000'0 Fulltime supervisor 000'09 000' salary Profit 1,435,000 (i) Prepare the monthly control report showing original budget, flexed budget, and variances. (ii) Using your control report prepared in (i) above, prepare a report on Chimco's performance during the year 2020. (iii) Provide recommendations to Chimco's CEO on areas of improvement.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Chimco is a limited company operating in the Hat making industry in East England. Below is a
cost breakdown of their activities for the year 2020. Their business has been severely impacted
by the Covid-19 lockdowns as they people were confined to their houses due to Government
regulations.
Items
Cost per
Actual (£)
unit
Units
000'00
Selling price
35
Revenue
000'000
Variable costs:
Materials
3.50
000'088
Labour
000'0
Overhead
2.50
000'0s
Contribution
24
1,830,000
Fixed overheads:
Warehouse rental
200,000
000'0s
Insurance
000'0
000'0
Fulltime supervisor
000'09
000's
salary
Profit
1,435,000
(i) Prepare the monthly control report showing original budget, flexed budget, and variances.
(ii) Using your control report prepared in (i) above, prepare a report on Chimco's performance
during the year 2020.
(iii) Provide recommendations to Chimco's CEO on areas of improvement.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb34268bb-8e91-4c9d-89e6-9b20ae753f8c%2Fcfbf6ea5-8564-4d07-98bf-4e29e1f3e550%2Ftfvxz59_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Chimco is a limited company operating in the Hat making industry in East England. Below is a
cost breakdown of their activities for the year 2020. Their business has been severely impacted
by the Covid-19 lockdowns as they people were confined to their houses due to Government
regulations.
Items
Cost per
Actual (£)
unit
Units
000'00
Selling price
35
Revenue
000'000
Variable costs:
Materials
3.50
000'088
Labour
000'0
Overhead
2.50
000'0s
Contribution
24
1,830,000
Fixed overheads:
Warehouse rental
200,000
000'0s
Insurance
000'0
000'0
Fulltime supervisor
000'09
000's
salary
Profit
1,435,000
(i) Prepare the monthly control report showing original budget, flexed budget, and variances.
(ii) Using your control report prepared in (i) above, prepare a report on Chimco's performance
during the year 2020.
(iii) Provide recommendations to Chimco's CEO on areas of improvement.
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