XYZ Construction Ltd.

Scenario: Prepare Budget and Analyze Variances

Data:

• Budgeted Data:
  • Sales Revenue: $500,000
  • Direct Materials: $100,000
  • Direct Labor: $150,000
  • Overhead: $50,000

• Actual Data:
  • Sales Revenue: $480,000
  • Direct Materials: $110,000
  • Direct Labor: $160,000
  • Overhead: $55,000

Requirements:

1. Prepare the Flexible Budget based on actual sales revenue.
2. Calculate the variances for Direct Materials, Direct Labor, and Overhead.
3. Analyze the variances and identify possible causes.
4. Discuss the implications of budget variances on XYZ Construction Ltd.'s financial performance.