Question 6Mowbray Ltd makes and sells one product, the standard costs of which are as follows:Direct materials (3 kg at £2.50/kg)Direct labour (7¹/2 minutes at £18.00/hr)Fixed overheadsSelling priceStandard profit marginThe monthly production and sales are planned to be 1,200 units.The actual results for May were as follows:Sales revenueDirect materialsDirect labourFixed overheadsOperating profit££(7.50)(2.25)(3.60)(13.35)20.006.6518,000(7,400)(2,300)(4,100)4,200(2,800 kg)(127.5 hr)There were no inventories at the start or end of May. As a result of poor sales demand duringMay, the business reduced the price of all sales by 10 per cent.Required:Calculate the budgeted profit for May and reconcile it to the actual profit through variances, goinginto as much detail as is possible from the information available.

Name: Question 6Mowbray Ltd makes and sells one product, the standard costs
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Description: Question 6Mowbray Ltd makes and sells one product, the standard costs of which are as follows:Direct materials (3 kg at £2.50/kg)Direct labour (7¹/2 minutes at £18.00/hr)Fixed overheadsSelling priceStandard profit marginThe monthly production and sa

Statement showing Flexible budget for May: Actual number of units sold 1,000 units…

Business

Accounting

Question 6 Mowbray Ltd makes and sells one product, the standard costs of which are as follows: Direct materials (3 kg at £2.50/kg) Direct labour (7¹/2 minutes at £18.00/hr) Fixed overheads Selling price Standard profit margin The monthly production and sales are planned to be 1,200 units. The actual results for May were as follows: Sales revenue Direct materials Direct labour Fixed overheads Operating profit £ 18,000 (7,400) (2,300) (4,100) 4,200 £ (7.50) (2.25) (3.60) (13.35) 20.00 6.65 (2,800 kg) (127.5 hr) There were no inventories at the start or end of May. As a result of poor sales demand during May, the business reduced the price of all sales by 10 per cent. Required: Calculate the budgeted profit for May and reconcile it to the actual profit through variances, going into as much detail as is possible from the information available.

Question 6 Mowbray Ltd makes and sells one product, the standard costs of which are as follows: Direct materials (3 kg at £2.50/kg) Direct labour (7¹/2 minutes at £18.00/hr) Fixed overheads Selling price Standard profit margin The monthly production and sales are planned to be 1,200 units. The actual results for May were as follows: Sales revenue Direct materials Direct labour Fixed overheads Operating profit £ 18,000 (7,400) (2,300) (4,100) 4,200 £ (7.50) (2.25) (3.60) (13.35) 20.00 6.65 (2,800 kg) (127.5 hr) There were no inventories at the start or end of May. As a result of poor sales demand during May, the business reduced the price of all sales by 10 per cent. Required: Calculate the budgeted profit for May and reconcile it to the actual profit through variances, going into as much detail as is possible from the information available.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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