Calculate the variances from the budgeted

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Reference no: EM133164631

Main Question Flexed Budget

Dreams is an Engineering company producing a wide range of component parts for the aerospace industry.

The production manager wishes to assess the change to the budget on the basis that 3,600 units are produced.

Production Units	2.000	2.800	3.200
Direct Materials	3,000	4,200	4,800
Depreciation	1,200	1,200	1,200
Electricity	2,500	3,100	3,400
Maintenance	1,600	2,080	2,320
Direct Labour	2,500	3,500	4,000
Transportation	1,400	1,800	2,000

Required:

i. Flex the budget for the actual activity level achieved during the period.

ii. The actual costs achieved during the period were:

Direct Materials	5,760
Depreciation	1,200
Electricity	3,900
Maintenance	3,980
Direct Labour	4,320
Transportation	2,380

Calculate the variances from the budgeted figures calculated in (a) above

iii. Critically evaluate the possible reason(s) for the variances calculated above.

Reference no: EM133164631

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