ACW271 MANAGEMENT ACCOUNTING II TOPIC 2 TUTORIAL Question 1 Barton Bhd manufactures a single product, and has prepared the following budget for the next period: Production/ Sales in units 9,450 RM Sales revenue 236,250 Direct materials Direct labour Production overheads Selling, distribution and administration costs Total costs 37,800 28,350 33,075 28,965 128,190 Profit 108,060 The following information should also be taken into consideration: 1. The above budget is based on a 90% utilization of the maximum operating capacity. 2. The production overhead is a semi-variable cost. At the maximum capacity the budgeted overhead would be RM35,175. 3. The selling, distribution and administration costs include a fixed element of RM7,230. 4. No finished goods or raw material stocks are held. ales mademum Required: Prepare a flexible budget for the period at: (i) 80% utilization of operating capacity (ii) 100% utilization of operating capacity Question 2 Argon Bhd is a manufacturing company which produces a fixed budget for planning purposes. Set out below is the fixed monthly budget of production costs, together with the actual results observed for the month of November 2021. Units produced Costs: Direct material Direct labour Variable production overhead Fixed production overhead Depreciation Budget 5,000 RM 20,000 60.000 14,000 10,000 4,000 Actual 5,500 RM 22,764 75,900 14,950 9,000 4.000 In preparing the flexible budget, the following standards were adopted: 1 Direct material Direct labour Variable production overhead Fixed production overhead Depreciation 10kg of material per unit produced 2 hours per unit produced A cost rate per direct labour hour was calculated A cost rate per unit was calculated Straight-line method is used for all assets The following additional information is available concerning the actual output: 1. The actual usage of material in November was 54,200kg 2. The nationally agreed wage rate increased to RM6.60 per hour at the start of November Required: (a) Prepare the flexible budget in respect of Argon Bhd for the month of November 2021. (b) Analyse and comment on cost variances. WPS Office 2