Standard costing

Thomas Ltd makes a standard product, which sells at 5 a unit. Its budget and actual figures for a month are as follows;

Budget

Production for the month 5000 units

Direct materials (0.5kg at 3) 7,500

Direct Labour (15 minutes at 5/hour) 6,250

Fixed overheads 6,000

Actual

Production for the month 5400 units

Labour hours for month 1300 hours

Labour cost for month 6,885

Materials used in month 2,830kg

Materials cost for month 8,770

Fixed overheads 6,350

Actual Operating Profit 4,455

There was no existing stock at the start of the month.

Required:

a) Prepare a flexed budget for the month, showing expected profit.

b) Calculate standard costing variances for the month and reconcile the budgeted and actual profit figures.