c. Ramuthunyana (Pvt) Ltd. is comparing budget and actual data for the last four months.

Budget Actual

P P

Sales 950 000 922 500

Cost of sales Raw materials 133 000 130 500

Direct labour 152 000 153 000

Variable production overheads 100 700 96 300

Fixed production overheads 125 400 115 300

438 900 427 400

The budget was prepared based on 95 000 units produced and sold, but actual production and sales for the four months period were 90 000 units.

Ramuthunyana (Pvt) Ltd uses standard costing and absorbs fixed production overheads on a machine hour basis. A total of 28 500 standard machine hours were budgeted. A total of 27 200 machine hours were actually used in the period.

Required: Prepare a revised budget at the new level of activity using a flexible budgeting approach (8 marks)