Question 2

Pankhurst PLC make and sell a single product. Annual sales in units for 2022

are expected to be 210,000, and standard cost and selling price per unit is:

Selling price 30

Variable costs:

Materials 8

Labour 8

Overheads 2

Annual fixed overheads for 2022 are budgeted at:

Manufacturing: 528,000

Non-manufacturing 336,000

Actual production and sales for the month of January was 16,000 units. The actual revenue and expenditure for the month of January 2022 was as follows:

Sales revenue 502,000

Expenditure:

Materials 118,500

Labour 125,500

Variable overhead 32,400

Fixed overheads:

Manufacturing 40,000

Non-manufacturing 35,000

Pankhurst PLC divides the annual budget by 12 in order to produce monthly control reports.

Required:

1. Prepare the monthly control report showing original budget, flexed budget and variances.

[12 Marks]

2. Using your report in (a above), give a brief analysis of Pankhursts performance during the month.

[7 marks]

3. Suggest how this control report could be improved, describing any extra information you would need in order to do so.

[6 marks]

Total: 25 Marks