Rockets and More Ltd. Is concerned about the uncertain nature of its market for the upcoming year and has prepared budgeted results on 90%, 100% and 105% activity as follows: Output Revenue Less: Materials Labour Costs Production overhead costs Revenue Less: Expenses Materials costs Labour costs Prod. Overhead costs 217,500 Administrative Costs 120,000 Selling and distribution cost 70,000 1,185,000 Administration costs Selling and distribution costs Net profit 90% 45,000 $ 1,350,000 Required: A. Net Profit 200,000 Only 37,500 units have been sold with the following results: S B. 337,500 440,000 165,000 100% 50,000 S 1,500,000 375,000 485,000 235,000 130,000 75,000 1,300,000 311,750 351,500 171,250 117,500 66,500 105% 52, 500 $ 1,575,000 393,750 507,500 243,750 135,000 77,500 1,357,500 217,500 S 1,075,000 1,018,500 56,500 i. The budgeted selling price is $30 per unit ii. All production is sold iii. The fixed element of the budgeted costs will remain unchanged at all levels of production Prepare a statement for the year showing the flexible budget at the actual level of activity. Examine the variances of $20,000 or greater, analysing the possible reasons for such variances.

Rockets and More Ltd. Is concerned about the uncertain nature of its market for the upcoming year and has prepared budgeted results on 90%, 100% and 105% activity as follows: Output Revenue Less: Materials Labour Costs Production overhead costs Revenue Less: Expenses Materials costs Labour costs Prod. Overhead costs 217,500 Administrative Costs 120,000 Selling and distribution cost 70,000 1,185,000 Administration costs Selling and distribution costs Net profit 90% 45,000 $ 1,350,000 Required: A. Net Profit 200,000 Only 37,500 units have been sold with the following results: S B. 337,500 440,000 165,000 100% 50,000 S 1,500,000 375,000 485,000 235,000 130,000 75,000 1,300,000 311,750 351,500 171,250 117,500 66,500 105% 52, 500 $ 1,575,000 393,750 507,500 243,750 135,000 77,500 1,357,500 217,500 S 1,075,000 1,018,500 56,500 i. The budgeted selling price is $30 per unit ii. All production is sold iii. The fixed element of the budgeted costs will remain unchanged at all levels of production Prepare a statement for the year showing the flexible budget at the actual level of activity. Examine the variances of $20,000 or greater, analysing the possible reasons for such variances.

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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