Mexican Munchies is a company which manufactures specially flavoured snacks from potatoes. The weight of the finished product is 80% of the weight of the potatoes put into the production process. The finished product is packed into 200 gram printed packets. Several batches of potato chips can be fried in the same cooking oil. Flavourants are added at the rate of 3% of the weight of potatoes.

The following financial information is available for June 2010: Actual costs

R

Budgeted costs

R

Potatoes (direct)

322 400

306 000

Cooking oil (indirect)

13 400

12 000

Flavourants (direct)

9 800

10 000

Electricity - Basic fee

3 100

3 000

Electricity - Consumption

19 200

20 000

Wages - Machine operators (direct)

24 300

25 000

Maintenance of machinery (variable)

15 300

13 000

Advertising

2 000

2 000

Computer expenses of administrative personnel

5 200

4 000

Depreciation - Plant and machinery (straight-line method)

7 400

7 000

Salary of the factory supervisor

15 500

15 000

Salary of the administration manager

15 000

15 000

Cleaning expenses - Offices (daily)

2 000

2 000

Cleaning expenses - Factory (daily)

13 600

14 000

468 200

448 000