1. Mobility Chairs Ltd makes 2 designs of Wheelchair, Manual and Motorised. The budgeted monthly cost and revenues for each type of wheelchair are as shown below for 2022 Motorised Manual Fees to be received per Wheelchair 2.000 1.200 Direct Costs per wheelchair Motors 500 Wheel chair frames 300 200 Upholstery 200 200 Construction workshop staff 4 hours x 20 80 2.5 hours x 20 SO Upholstery fixing staff 3 hours x 15 45 2 hours x 15 30 Customisation staff 2 hours x 20 40 1 hour x 20 20 Total Direct Cost 1.165 500 Contribution to Fixed costs 835 700 The company budgeted that sales would be 1,000 wheelchairs per month, split equally between Motorised Chairs and Manual Chairs. Actual Activity for the month of January is shown below: Motorised chairs were sold for 1,900 Manual chairs were sold for 1,200; 750 Wheelchairs were made and sold-200 Motorised chairs and 550 Manual chairs: Construction staff - were paid for 2400 hours, costing a total of 45,600; Upholstery fixing staff - were paid for 1,295 hours, costing a total of 20,720: 200 motors were purchased at a total cost of 98.000: 770 wheelchair frames were bought. This extra was needed due to careless handling of some frames needed for the Motorised wheelchairs. The total costs were: Motorised 80,000, Manual 115,500 There was no Upholstery wastage, 154,000 was spent: Customisation staff were paid 19.000 Required: (a) Based on the original estimates prepare a budget for each month: (4 marks) (b) Prepare a table for January showing: i) a flexed budget at the actual level of activity. ii) actual income, expenditure and net income. (4 marks) (ci) Calculate all possible variances for January for sales of each wheel chair and each type of expense. (8 marks) (cii) Calculate the sales mix variance (2 marks) (di) Comment on the findings of your analysis. (3 marks) (dii) Provide recommendations on how to improve the Company's performance. (4 marks) 1. Mobility Chairs Ltd makes 2 designs of Wheelchair, Manual and Motorised. The budgeted monthly cost and revenues for each type of wheelchair are as shown below for 2022 Motorised Manual Fees to be received per Wheelchair 2.000 1.200 Direct Costs per wheelchair Motors 500 Wheel chair frames 300 200 Upholstery 200 200 Construction workshop staff 4 hours x 20 80 2.5 hours x 20 SO Upholstery fixing staff 3 hours x 15 45 2 hours x 15 30 Customisation staff 2 hours x 20 40 1 hour x 20 20 Total Direct Cost 1.165 500 Contribution to Fixed costs 835 700 The company budgeted that sales would be 1,000 wheelchairs per month, split equally between Motorised Chairs and Manual Chairs. Actual Activity for the month of January is shown below: Motorised chairs were sold for 1,900 Manual chairs were sold for 1,200; 750 Wheelchairs were made and sold-200 Motorised chairs and 550 Manual chairs: Construction staff - were paid for 2400 hours, costing a total of 45,600; Upholstery fixing staff - were paid for 1,295 hours, costing a total of 20,720: 200 motors were purchased at a total cost of 98.000: 770 wheelchair frames were bought. This extra was needed due to careless handling of some frames needed for the Motorised wheelchairs. The total costs were: Motorised 80,000, Manual 115,500 There was no Upholstery wastage, 154,000 was spent: Customisation staff were paid 19.000 Required: (a) Based on the original estimates prepare a budget for each month: (4 marks) (b) Prepare a table for January showing: i) a flexed budget at the actual level of activity. ii) actual income, expenditure and net income. (4 marks) (ci) Calculate all possible variances for January for sales of each wheel chair and each type of expense. (8 marks) (cii) Calculate the sales mix variance (2 marks) (di) Comment on the findings of your analysis. (3 marks) (dii) Provide recommendations on how to improve the Company's performance. (4 marks)
