Prepare a statement showing Budgeted, Flexed, and Actual cost figures for JuLy
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Oaklands Manufacturing Ltd
Oaklands Manufacturing Ltd. produces a health drink which it sells in health shops and gyms across the country. The business has been doing well and an examination of its results for the month of July showed that it had produced and sold 500 more bottles of the drink than the expected 4,000 units of Product A during July. Despite the increased number of bottles produced the business is pleased to find that its
The following are the actual results for July as produced by the
Materials (4,200 litres drink mix) Direct employee labour (15,000 hours) Variable overhead based on labour hrs Fixed
Total actual manufacturing cost
£
37,800 63,000 79,500 69,000
249,300
The company never carries stocks of materials, finished goods, or work-in-progress.
The following was the budget for July, based on
Materials (4,400 litres drink mix)
Direct employee labour (16,000 hours)
Variable overhead (application based on labour hrs) Fixed overheads
Total budgeted manufacturing cost
£
39,160 72,000 80,000 75,000
266,160
Oakland’s accountant wishes to set out the variances as between the budgeted figures and the actual results in a meaningful manner for the Managing Director.
You are required to:
(a) Prepare a statement showing Budgeted, Flexed, and Actual cost figures for JuLy
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