Question 5 Answer all parts Part A Fork plc manufactures a single product and the expected sales and production are 14,000 units for April 2020. It is expected that 5,000 kg of raw material will be required at a total cost of 25,000 Labour hours are expected to be 8,000 hours to produce 14,000 units. Production workers are paid 10.00 an hour. Expected fixed production overheads for the month are 50,000 and are absorbed on the basis of labour hours. The expected sales price is 12 per unit. The actual results were Number of units sold 13,500 Sales revenue 150.000 Materials 29,000 Labour 82,000 Fixed production overheads 45,000 Required a. Prepare a fixed, flexed and actual budget for April 2020, identify the variances and briefly comment on the variances. (15 marks) Part B Frice plc manufactures wooden boxes. The variance analysis shown below has been produced for the production department for the last accounting period. Material price variance 3,000 F material usage variance 4,000 A labour rate variance 2,000 A labour efficiency variance 3,000 F variable overhead expenditure variance 6,000 A variable overhead efficiency variance 2.000 F fixed overhead expenditure variance 9,000 F F = favourable variance, A = adverse variance In response to the variance analysis the production manager has made the following comments 1. We were experiencing poor staff morale and a high staff turnover so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company. 2. I was able to source an alternative supplier for materials. I negotiated a very good price which I believe will save the company a considerable amount of money. 3. We had a light sanding machine which I thought was not being sufficiently used and was therefore costing the business too much money. I sold this machine and hired a sander only when we needed one Required b. Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided. (20 marks) Frice plc manufactures wooden boxes. The variance analysis shown below has been produced for the production department for the last accounting period. Material price variance 3,000 F material usage variance 4,000 A labour rate variance 2,000 A labour efficiency variance 3,000 F variable overhead expenditure variance 6,000 A variable overhead efficiency variance 2,000 F fixed overhead expenditure variance 9,000 F F = favourable variance, A = adverse variance In response to the variance analysis the production manager has made the following comments 1. We were experiencing poor staff morale and a high staff turnover so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company. 2. i was able to source an alternative supplier for materials. I negotiated a very good price which I believe will save the company a considerable amount of money. 3. We had a light sanding machine which I thought was not being sufficiently used and was therefore costing the business too much money. I sold this machine and hired a sander only when we needed one Required b. Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided. (20 marks) Question 5 Answer all parts Part A Fork plc manufactures a single product and the expected sales and production are 14,000 units for April 2020. It is expected that 5,000 kg of raw material will be required at a total cost of 25,000 Labour hours are expected to be 8,000 hours to produce 14,000 units. Production workers are paid 10.00 an hour. Expected fixed production overheads for the month are 50,000 and are absorbed on the basis of labour hours. The expected sales price is 12 per unit. The actual results were Number of units sold 13,500 Sales revenue 150.000 Materials 29,000 Labour 82,000 Fixed production overheads 45,000 Required a. Prepare a fixed, flexed and actual budget for April 2020, identify the variances and briefly comment on the variances. (15 marks) Part B Frice plc manufactures wooden boxes. The variance analysis shown below has been produced for the production department for the last accounting period. Material price variance 3,000 F material usage variance 4,000 A labour rate variance 2,000 A labour efficiency variance 3,000 F variable overhead expenditure variance 6,000 A variable overhead efficiency variance 2.000 F fixed overhead expenditure variance 9,000 F F = favourable variance, A = adverse variance In response to the variance analysis the production manager has made the following comments 1. We were experiencing poor staff morale and a high staff turnover so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company. 2. I was able to source an alternative supplier for materials. I negotiated a very good price which I believe will save the company a considerable amount of money. 3. We had a light sanding machine which I thought was not being sufficiently used and was therefore costing the business too much money. I sold this machine and hired a sander only when we needed one Required b. Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided. (20 marks) Frice plc manufactures wooden boxes. The variance analysis shown below has been produced for the production department for the last accounting period. Material price variance 3,000 F material usage variance 4,000 A labour rate variance 2,000 A labour efficiency variance 3,000 F variable overhead expenditure variance 6,000 A variable overhead efficiency variance 2,000 F fixed overhead expenditure variance 9,000 F F = favourable variance, A = adverse variance In response to the variance analysis the production manager has made the following comments 1. We were experiencing poor staff morale and a high staff turnover so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company. 2. i was able to source an alternative supplier for materials. I negotiated a very good price which I believe will save the company a considerable amount of money. 3. We had a light sanding machine which I thought was not being sufficiently used and was therefore costing the business too much money. I sold this machine and hired a sander only when we needed one Required b. Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided. (20 marks)