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Diogo Ltd makes a standard product, which is budgeted to sell at $17 a unit. It is made from a budgeted 0.5 kilograms of material,

Diogo Ltd makes a standard product, which is budgeted to sell at $17 a unit. It is made from a budgeted 0.5 kilograms of material, budgeted to cost $7 per kilogram, and worked on by an employee paid a budgeted $13 per hour, for a budgeted 15 minutes. Monthly fixed overheads are budgeted at $18,000. The output for March was budgeted at 5,100 units.

The actual results for March were as follows:

$

Sales revenue (5,380 units)

79,500

Materials (2,840 kilograms)

(26,400)

Labour (1,300 hours)

(20,700)

Fixed overheads

(19,100)

Actual operating profit

13,300

No inventories existed at the start or end of March.

Required:

[i] Deduce the budgeted profit for March. [5 marks]

[ii] Reconcile it with the actual profit. [12 marks]

[iii] Analyse negative variances and explain an impact of your findings on Diogos decision making. [8 marks]

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