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Element Ltd makes one standard product; its operating budget for March (based on manufacturing 500 units) is as follows: The actual results for March are
Element Ltd makes one standard product; its operating budget for March (based on manufacturing 500 units) is as follows: The actual results for March are as follows (460 units were actually manufactured): There were no inventories remaining either at the beginning or the end of March. a) Prepare a flexed budget for March based on the information given. Show your workings clearly. b) Prepare a statement comparing your flexed budget from point a) above with actual results and calculate the variances from budget. In each case, state whether the variance is favourable or adverse. Show your workings clearly. c) Using you' answers from point b) above state which variances you think require investigation and give reasons why you think they should be investigated. d) Explain how budgeting can be used within a business to motivate managers. Identify two disadvantages of using budgets in this way and discuss the ways in which businesses can overcome these disadvantages
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