Salah Global Products (SGP) is a manufacturer of sporting trophies and has factories across the world making original and replica trophies for each geographic region that it serves. Following the success of Liverpool Football Club winning the Premiership title in 2020, SGP have created a replica Premier League trophy, which allows fans to create a personal message on the front of the trophy, either for themselves or for others. The SGP marketing team has assigned the product name "Living the Dream". Unfortunately, the product launch was delayed due to issues in securing the required licences from both Liverpool FC and the Premier League. The product eventually launched on the 1st November 2020. You are Gini Dalglish and have recently joined SGP as a Management Accountant in their UK business, and your line manager is the UK Finance Director, Susan Fenway. Susan would like to review the product's performance for the first month to understand whether any changes are required in preparation for the Christmas gift season, and she has asked you to perform this analysis and report back. Susan has provided you with the following standard costs for one unit of the product. Direct labour (15 minutes) Direct materials (2 grams) Fixed overheads (based on the budgeted monthly output of 20,000 units) Selling price Profit Sales revenue Direct labour (4,000 hours) Direct materials (32,000 grams) Fixed overheads Profit During the month of November, you have found that only 15,000 units were made and sold and the financial results were as follows: £ 2.30 1.50 3.30 7.10 10.50 3.40 £ 153,900 (35,040) (23,360) (67,350) 28,150

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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A) Calculate the following variances using the budgets in (a) and the actual performance for November. i. Sales volume ii. Sales price iii. Direct labour efficiency iv. Direct labour rate v. Direct material usage vi. Direct material rate vii. Fixed overheads B) Produce a reconciliation statement comparing the original budgeted and actual profits for the product for the month of November. Clearly explain the variances in the reconciliation.

Salah Global Products (SGP) is a manufacturer of sporting trophies and has factories across the world
making original and replica trophies for each geographic region that it serves.
Following the success of Liverpool Football Club winning the Premiership title in 2020, SGP have created
a replica Premier League trophy, which allows fans to create a personal message on the front of the trophy,
either for themselves or for others. The SGP marketing team has assigned the product name "Living the
Dream".
Unfortunately, the product launch was delayed due to issues in securing the required licences from both
Liverpool FC and the Premier League. The product eventually launched on the 1st November 2020.
You are Gini Dalglish and have recently joined SGP as a Management Accountant in their UK business,
and your line manager is the UK Finance Director, Susan Fenway.
Susan would like to review the product's performance for the first month to understand whether any changes
are required in preparation for the Christmas gift season, and she has asked you to perform this analysis
and report back. Susan has provided you with the following standard costs for one unit of the product.
Direct labour (15 minutes)
Direct materials (2 grams)
Fixed overheads (based on the budgeted monthly output of 20,000 units)
Selling price
Profit
Sales revenue
Direct labour (4,000 hours)
Direct materials (32,000 grams)
Fixed overheads
Profit
During the month of November, you have found that only 15,000 units were made and sold and the financial
results were as follows:
£
2.30
1.50
3.30
7.10
10.50
3.40
£
153,900
(35,040)
(23,360)
(67,350)
28,150

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