Question

Dandy Manufacturers company Ltd, maker of product Y has prepared its budget for 2018, based on two activity levels of 80% and 100% with production units of 2,800 and 3,500 units respectively.
The budget is as follows;

Category                            80%                 100%
Sales                                224,000             280,000
Direct Material               84,000                105,000
Direct Labour                 50,400                 63,000
Production Overhead   48,800                 53,000

The company's actual results for the period is as follows;
Sales in Units                                        3,150 Units
Sales                                                     $252,000
Direct Material                                    $ 44,000
Direct Labour                                      $ 60,000
Overhead (60% of amounts is fixed) $ 50,000

Prepare a flexible budget for a production level of 70% and 90% and compare the flexible budget at 90% level of activity with the actual result

Answer 1

				Actual
Category	70%	90%
Units	2,450	3,150
Sales	$196,000	$252,000		$252,000	$0	-
Direct Material	$73,500	$94,500		$44,000	$50,500	F
Direct Labour	$44,100	$56,700		$60,000	$3,300	U
Production Overhead
Fixed	$32,000	$32,000		$30,000	$2,000	F
Variable	$14,700	$18,900		$20,000	$1,100	U
Working
Per Units
Sales	$80
Direct Material	$30
Direct Labour	$18
Production Overhead
Fixed	$32,000
Variable	$6