Flex the budget to take into account the actual level

Reference no: EM13907543

A company manufactures one product, and the following infor mation refers to the budget and actual data for that product:

Sales and production units	Budget 30,000	Actual 28,000
Selling price per unit (£)	280	270
Direct materials	£'000	£'000
1O kg per unit at £8 per kg 252,000 kg at £9 per kg Direct labour 8 hours per unit at £7 per hour	2400 1,680	2,268
196,000 hours at £7 per hour		1,372
Variable production overheads	1,200	1,110
Fixed production overheads	2,100	2,100

You are required to:

(a) Flex the budget to take into account the actual level of output and provide an explanation of the difference between the original budget and the flexed budget.

(b) Provide a variance analysis which explains the difference between the flexed budget profit and the actual profit.

Reference no: EM13907543

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