Poleg Limited manufactures kitchen cupboards. The standard cost of each unit is £120, comprising:

The company had budgeted to make and sell 1,000 cupboards at a selling price of £150 in June. However, in June, the actual figures were as follows:

Prepare a performance report reconciling the budgeted profit to the actual profit showing all the variances arising. Write a brief report advising management on your finding and possible reasons why each variance arose.

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Direct materials Direct labour 15 sq metres at 4.50 per sq metre 67.50 5 hours at 6 per hour 30.00 Variable overheads Fixed overheads 5 hours at 3 per labour hour 15.00 7.50 120.00