Bedford Ltd is a manufacturing business with several production departments. Benjamin Kent, the manager of the machining department, submitted the following figures for the firm's annual budget for his department:

Benjamin is being criticised for overspending \(£ 33,150\) compared with his normal budget. It is appreciated that he has made a saving on heating and lighting, but concern is being expressed over the spending on materials and labour. Benjamin feels that he has been able to control the department's costs efficiently.

Required:
A. Construct a flexible budget for 60 per cent, 70 per cent, 75 per cent, 85 per cent and 90 per cent of production capacity, calculate any savings or overspending by Benjamin's department and comment on its efficiency.

B. Describe the operation of an efficient system of budgetary control.

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Units produced (normal production level) 64,000 Raw materials 294,400 Direct labour 236,800 Power 38,400 Repairs and maintenance (25% variable at this level of budgeted cost) 51,200 Insurance 1,300 Heating and lighting 1,250 Indirect wages (15% variable at this level of budgeted cost) 64,000 Total cost 687,350