CoursHeroTranscribedText: Table 3.6: Overall budget production statement d e Original Flexed Actual Overall Activity budget budget variance variance Units 2.000 1,600 1,600 (a - c) (a - b) produced E E E E E Direct 1,000 950 (A/F) (A/F) materials Direct 2,000 1,500 (A/F) (A/F) labour Variable 3.000 2,475 (A/F) (A/F) overheads Fixed 4,000 4,000 overheads Realta Pic is a manufacturer of electrical components which has contracts to supply several major engineering contractors. The company's objectives include the aim of operating profitably overall, although the directors accept that results of individual products will vary according to the competitiveness of markets. Targets are therefore set for each individual product and market. Realta operates twelve monthly budget periods for management control purposes. Set out below is a part of the master budget for Product NR12 for Period 10. This budget is based on normal annual operating capacity of 6,000 units evenly distributed over the year. Product NR12 was introduced eighteen months ago and the sales director is exploring new markets for its sale. Budget for Period 10: Product NR12 Per unit Total Selling price E100.00 Direct materials @ $2.50 per kg 4 kg Machine time 30 minutes Direct labour @ f.15.00 per hour 120 minutes Manufacturing overhead: variable with machine hours f.2.00 Manufacturing overhead: fixed absorbed per unit of output E15,000 During Period 10 actual production and sales of NR12 totalled 520 units and the cost ledger summary shows:Results for Period 10: Product HR12 E E Sales 520 units 51,800 Direct materials 3,010 kg used 5,300 Direct labour 1,080 hours paid for 15,500 Manufacturing overh ead'. variable 1,100 Manufacturing overh ead.' xed 15,000 Total manufacturing costs incurred 31900 Net income 13,900 Machines used recorded 290 hours on Product NRiE in Period 10. a. Prepare an overall budget production statement that shows both the original and the exible budget for Product NR12 for Period 10. (Your performance report should be in a very.r similar format to Table 3.5 in Unit 2 Session 3. The only difference is to add a new column {a} at the beginning ofthe table which shows standard selling price, standard cost per unit (for each variable cost], standard oontribution per unit, standard fixed cost per unit and standard proiii per unit] {23 manta} b. In terms of management control, explain the benet to Realla in using the standard cost information asked for in {a} above. ['3 mantis)