Q1 a) Prepare the flexible budget analyzing and commenting efficiency and price variances (Favorable and Unfavorable results) up to the operating income (EBIT).
Q1 a) Prepare the flexible budget analyzing and commenting efficiency and price variances (Favorable and Unfavorable results) up to the operating income (EBIT).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Q1-EXCELLENCE UAE Ltd budgeted at the beginning of the period to produce and sell 90,000 units of production
at a price of 22 AED each. The following are the budgeted expenses: Direct Material 4 AED per unit, Direct Labor, 8
AED per unit, Fixed manufacturing 850,000 AED. The reported actual values at the end of the period are the following:
Unit sold 100,000/Price 20 AED/Direct Material 5 AED per unit/Direct Labor 6 AED per unit/ Fixed Manufacturing
800,000 AED. Assume that the amount of financial debt of the company is 500,000, the amount of Equity is 500,000,
the interest rate is 10%, the income taxes rate is 20% and that the Annual General Meeting decide to retain 40% the
earnings.
Q1 a) Prepare the flexible budget analyzing and commenting efficiency and price variances (Favorable and
Unfavorable results) up to the operating income (EBIT).
Q1 b) Calculate the ROI and ROE, only for the actual results (financial statement), comment the results assuming that
the minimum desirable return of the owners is 5%.
Q2-Analyze, describe and comment the usefulness of the balance scorecard"
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