Case Study

J. Jones Pty Ltd has provided the following information for the quarter ended in March 2016.

Budget production cost per unit:

Budget Per unit Actual Per unit

$ $

Direct materials 41,800	42.3
Direct labour 1.20	1.15
Indirect variable 3.60	3.50
Plus Direct fixed (per month) 8000	8500
Sales estimates (number of items	): Budget	Actual
January	2800	2600
February	3000	2990
March	3250	3560

The budget selling price for the product is $85 per box, but the companys actual price varies according to negotiations with customers who buy in bulk.

Sales revenue:

Actual $

January 224 120 February 249 665

March 306 010

Period expenses:

		Budget			Actual
	January	February	March	January	February	March
Administration expenses	16 700	17 000	17 500	17 000	17 200	16 500
Selling expenses	47 600	51 000	55 250	49 306	54 926	67 322
Financial expenses	8 500	8 500	8 500	8 500	8 500	8 500

Activity

From this data you are required to prepare the following reports using the software of your choice and analyse these reports to present a variation report. Assume that a variation of +/- 5% of the actual result compared to the budgeted figure is acceptable in your analysis.

Cost of production budget

Income statement budget

Cost of production

Prepare an income statement performance report for budget and actual showing gross profit and net profit for each month and the quarter.

Prepare a performance report showing the variance for the quarter in dollars and percentages.

An analysis of the report. Assume that a variation of +/- 5% budget to actual is acceptable in your analysis.