Part 4 Flexible budget and variance (15 marks)

The fixed budget and actual results for J Ltd for the latest period are as follows.

Production and sales

Direct material Direct labour Variable overhead Fixed overhead Total cost

Sales revenue Profit

Required

Budget 4,000 units ($)

72,000 84,000

48,000 67,200

271,200 384,000 112,800

Actual 4,640 units ($)

87,360 101,280 52,800

72,000 313,440 448,320

1. 134,880 flexible budget control report for the period, identifying the cost and revenue variances. (10 marks)
2. (2)Comment on this statement (5 marks):
3. The budgetary planning process for a manufacturing and trading organisation should always begin with the preparation of the sales budget.

Part 4 Flexible budget and variance (15 marks) The fixed budget and actual results for J Ltd for the latest period are as follows. Production and sales Budget 4,000 units ($) Actual 4,640 units ($) Direct material 72,000 87,360 Direct labour 84,000 101,280 Variable overhead 48,000 52,800 Fixed overhead 67,200 72,000 Total cost 271,200 313,440 Sales revenue 384,000 448,320 Profit 112,800 134,880 Required (1) Prepare a flexible budget control report for the period, identifying the cost and revenue variances. (10 marks) (2) Comment on this statement (5 marks): The budgetary planning process for a manufacturing and trading organisation should always begin with the preparation of the sales budget