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Question - ABC Pty Ltd operates a no frills hairdressing salon with a single service offering: wash, cut and blow dry (WCD). The price of this service is $40.
The budget for September is shown below. Actual figures for September were: sales revenue of $30,400 for 760 units; supplies $2,000, variable utilities $1,520; labour costs $16,000; and fixed overhead $9,000.
Sales (WCDs) 800
Sales Revenue $32,000
Supplies $1,600
Labour $16,000
Variable utilities $1,600
Fixed overheads $9,000
Profit/(loss) $3,800
Required -
(a) Make a variance analysis for September. The analysis should show the original budget, a flexed budget, actuals and relevant variances.
(b) To assist the Managing Director of ABC Pty Ltd in controlling the business, briefly interpret and provide possible explanations for the variances.
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