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

Production and sales Budget 4,000 units ($) Actual 5,000 units ($)

Direct material 68,000 90,000 Direct labour 84,000 110,000 Variable overhead 72,000 80,000 Fixed overhead 83,000 88,000 Total cost 307,000 368,000 Sales revenue 560,000 730,000 Profit 253,000 362,000

Required

(1) Prepare 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.