The following is extracted from the standard unit cost card of RNM Ltd for the quarter ended 31 December 20X9:

Variable overheads are determined by using the skilled labour hours, while fixed overheads are absorbed on the budgeted sale units. For the quarter ended 31 December 2009, the following results were reviewed:

Required:
Calculate the actual and budgeted profit for the quarter ended 31 December 20X9. Reconcile these profit figures by providing the appropriate variances in a performance report.
What explanations would you give regarding the discrepancies between the actual and the budgeted results?

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Selling price per unit Direct materials (2 kg @ 1 per kg) Skilled labour 1 hour @ 8 per hour Variable overheads Fixed overheads Net profit per unit Budgeted sales 25 2 00 8 3 2 10 10,000 units