Quantitative Analysis Caribiz Ltd uses a standard costing system and the following information relates to production and sales for the product line, Trinky for the month of April:- Budget/Standard Actual Sales 20,000 units 19,000 units

Sales price $28.00 $29.00

Materials used 2 kg per unit 41,500 kg

Material price per kg $5.00 $5.20

Labour hours 1 hour per unit 19,200 hours

Labour rate per hour $10.00 $9.00

Requirement:-

(a) Prepare a statement showing the budgeted and actual gross profit for the month of April.

(b) Calculate each of the following variances:

(i) Sales price variance

(ii) Sales volume variance

(iii) Materials price variance

(iv) Materials usage variance

(v) Labour rate variance

(vi) Labour efficiency variance

(c) Provide a possible explanation for the material and labour variances reported.

(d) How does a Flexible budget differ from a Static budget and what is the effect on Managements decision making?