Discuss whether the management should investigate

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Reference no: EM133164638

Flexed Budget

A supermarket, Singh and Waterhouse, which is linked to a large manufacturing company has been examining its budgetary control procedures, with particular reference to overhead costs. For the current year, they have identified the following costs:

TYPE Variable cost Fixed cost

£ £

Direct material 0.50

Direct Labor 0.75

Fixed cost 4,000

Selling and admin 0.20 1,000

overhead

Maintenance 0.05 1,200

The budgeted activity level is 20,000 units, but the actual activity level achieved was 15,000 units.

You are required to show the following calculations:
a) The total costs at the budgeted activity level of 20,000 units
b) The total costs at the actual activity level of 15,000 units
c) A variance analysis
d) Discuss whether the management should investigate the identified variances.

Reference no: EM133164638

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