i) Produce a budget statement for Caltex for November ii) Produce a profit statement for Caltex for November b. Produce a flexed budget statement for Caltex for November c. Calculate: i) Sales price variance ii) Sales profit – volume variance iii) Materials price variance (both materials) iv) Labour rate variance v) Labour efficiency variance vi) Overhead variances (both)
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
• 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
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Required:
a.
i) Produce a budget statement for Caltex for November
ii) Produce a profit statement for Caltex for November
b.
Produce a flexed budget statement for Caltex for November
c.
Calculate:
i) Sales price variance
ii) Sales profit – volume variance
iii) Materials price variance (both materials)
iv) Labour rate variance
v) Labour efficiency variance
vi) Overhead variances (both)
d.
Comment on your calculations produced in c above
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