Pembroke Ltd makes an item of furniture known as a Tripos. The standard cost per Tripos is as follows.

Further information for the three months ending 30 June 2005: 

1. The budgeted amount for direct labour: $120 000. 

2. Administration and selling overheads for three months ending 30 June 2005: $32 000. 

3. Factory profit is 20% of cost of production. 

4. The budgeted selling price per Tripos: $250. 

5. No stocks of raw materials, work in progress or finished goods are held.

Required 

(a) Prepare a budgeted Manufacturing, Trading and Profit and Loss Account for the three months ending 30 June 2005 to show the budgeted net profit or loss. 

(b) Calculate, using the information in (a), the break- even point and margin of safety. The margin of safety should be shown as a percentage.

The actual production of Tripos and the related revenue and costs for the three months ended 30 June 2005 were as follows.

The overhead absorption rate for variable production overhead was not affected. All Tripos produced were sold.

(c) Prepare 

(i) A flexed budget based on the actual number of Tripos produced and sold 

(ii) A financial statement based on actual results. 

(d) Calculate the following variances: 

(i) Quantity (the additional profit arising from increased production) 

(ii) Sales volume 

(iii) Sales price 

(iv) Direct materials usage 

(v) Direct materials price 

(vi) Direct labour efficiency 

(vii) Direct labour rate.

(e) Calculate the break-even point based on actual revenue and expenditure. (Show your workings.) 

(f) Prepare a financial statement to reconcile the original budgeted profit with the actual profit.

Transcribed Image Text:

Direct material: 2 kg at $7 per kg nosnimex3 Stae Direct labour: 3 hours at $10 per hour Production overhead: direct (variable) $14 per direct labour hour dhara indirect (fixed) based on overhead absorption rate of $30 per direct labour hour