Question
You work as a Management Accountant for the Victoria Plumbing branch based in Winchester. The company is a specialist in the installation of luxury Bathrooms
You work as a Management Accountant for the Victoria Plumbing branch based in Winchester. The company is a specialist in the installation of luxury Bathrooms and Kitchens. Their Bathrooms and Kitchens are highly sophisticated pre-designed or customised according to customer order. The local office is made of three departments Bathrooms and Kitchens being profit centres and General Administration (GA) being a cost centre. The GA is a fixed cost and consists of design, finance and administration
You have been provided the following budgeted information for the period ending December 2019.
Number of orders Bathrooms Kitchens
2,000 4,000
Price per orderin pounds 7,000 10,000
Direct costs per order 3,000 5,500
GA charge per order 2,500 2,500
Budgeted profit per order 1,500 2,000
Below is the actual information for the period ending December 2019
Bathrooms Kitchens
Number of orders 2,500 2,600
Price per order 6,100 13,000
Direct costs per order 2,700 8,000
GA cost per order 2,500 2,500
Actual profit per order 900 2,500
The actual cost of GA is estimated to be 17.5million.
Required:
- Calculate the budgeted and actual profits for the Bathrooms and Kitchen departments and for the whole branch.
b)Calculate the Sales Price Variances, Sales Mix Profit and Sales Profit Quantity Variances. And c) a reconciliation for the actual and budgeted profits for the branch that shows the variances as much as possible.
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