Accounting seminar 2: Management Accounting

You are the management accountant at Novice Ltd. This manufacturing company has just completed its first year of trading, during which actual output exceed planned output by 1,000 units. Your trainee, Robyn, has sent you the email below in preparation for the forthcoming directors' meeting, at which results for the year now ended will be reviewed and budgets for next year will be drafted.

'Good morning, Please find below details of the budgeted and actual activity and costs for the 12 months to 31 December.

Budget for planned production of 13,000 units Direct materials ($42 per unit, 3 Kg per unit) 546,000 Direct labour ($25 per unit, 2.5 hours per unit) 325,000 Overheads (production, selling, distribution and administration) 600,000 Budgeted total cost 1,471,000 Results for actual production of 14,000 units E Direct materials 41,300 kg purchased 569,940 Direct labour 32,200 hours paid 338, 100 Overheads (production, selling, distribution and administration) 625,000 Actual total cost 1,533,040