B.

1. Explain why the flexible budget is a better performance evaluation base than the

report based on static budget data.

2. Interpret why the president of Pressed Co. was displeased with the performance of

the mixing department manager.

3.

Advice the manger on how to improve the mixing department performance.

Question 1: (5 Marks) In order to control costs, Pressed Couses budgets. The February 2021 budget report for Sweets firm's Mixing Department is provided below. The expected production of 42.000 units per month or 504,000 units per year were the base for the report monthly budget amounts. The president of Pressed Co was displeased with the performance of the mixing department manager. Nevertheless, the mixing department manager was not able to understand the unfavorable results and thought he had done a great job. The actual units produced in February were 40,600. Pressed Company Budget Report Mixing Department For the Month Ended February 28, 2021 Actual SAR Manufacturing Cost Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable Budget 33,600 SAR 37.800 16,800 12.600 10,500 8,400 119.700 32,900 35,840 16.940 12.250 10,430 8.680 117.040 Difference Faverable E Unfavorable SAR 700 F 1.960 F 140U 350 F 70 F 280 U 2.660 F Fixed costs Rent Supervision Depreciation Total fixed 8.400 11,900 4,200 24,500 8,400 11.900 4.200 24,500 0 0 0 0 Total costs SAR144.200 SAR141 540 SAR 2.660 F Instructions: B 1. Explain why the flexible budget is a better performance evaluation base than the report based on static budget data. 2. Interpret why the president of Pressed Co was displeased with the performance of the mixing department manager 3. Advice the manger on how to improve the mixing department performance. 2. 2 Sweets Company Flexible Budget Report Micing Department For the Month Ended February 29, 2020 Variable Cost Particulars Direct Materials Direct Labour Indirect Material Indirect Labour Utilities Maintenance Total Variable a) CD) ) d) lebeld Budgeted Budgeted Budgeted Actual Flexible Cost Unit Cost Per Unite Poigared Produced Actual Production of 400 Uhita 33600 0042000.00 0.80 AOBOD OD 240.00 37800.00 42000.00 0.90 40600.00 2654000 16800.00 4200000040 4060000 15000 12600.00 42000.00030 20600.0012180.00 10500.00 4200000 0.25 40600 0010150.00 13400.00 42000.00 0.20 40500009720.00 119700.00 115710.00 Fixed Cost Particulars Flexible budgeted on actual production of 40600 units 18400.00 11900.00 420000 24500.00 Rent Supervision Depreciation Total Fixed cost Total Cost Particulars Flexible budgeted on actual production of 40600 units 115710.00 24500.00 140210.00 Vibe Cost Food Cost Total Cost [Page 2] Case Budgeted. Findible Alimentele Variable Cool . el MA V kehold Particulars Budgeted Budgeted bodgated Actual de All Variance Cosi Units Cost Per Unite Budget of cost Unit Produced Actual Actual Production cool of 10000 with Units Flece Badia bredt Mats 30000 42000 to 20000 2000 20000 To bo nie Ove Labour 37800.00 42000.000.00 40.800.0039540.00 3514000 700.00 Fonte direct Material 16800.00 42000.00 40 4060000162457000000000 med lobou 760000 2000.06 0.30 000 DO ZOLLO 200 10500.00 4200000023 40600 010150.00 1043000 23000 note Maintenance S20000 2000.00020 4000000151200000.00 56000 Total Variable 119700.00 115710.00117040.00 Fleed Cost Particulars Budgeted File 8400.00 85000 80000 Supervision 11900 DO 1909.00 11900.00 Depreciation $200.00 4200.00 4200.00 Tataract 245000 45000 4500.00 Total Cost Particulare Budgeted Flenible Actual Variabicon 1119700.00 115710 01170400 and cost 24500 24500 30 24500 Total Cost 144200.00 140210.00 141540.00 Conclusion: As evidential from the above calculations, it can be concluded that Ming Deputeti the content as actual cost of production 145540.00 of 40000 units are by 1330.00 as compared to be buget of 40210.00