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

Production and sales Budget 4,000 units ($) Actual 4,640 units ($)

Direct material 72,000 87,360

Direct labour 84,000 101,280

Variable overhead 48,000 52,800

Fixed overhead 67,200 72,000

Total cost 271,200 313,440

Sales revenue 384,000 448,320

Profit 112,800 134,880

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.