Prepare the first quarter variance analysis report

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Reference no: EM132860610

Question - Paine Ltd makes and sells a single product. Annual sales in units for 2017 are expected to be 200,000, and standard cost and selling price per unit is:

£

Selling price 35

Variable costs:

Materials 8

Labour 8

Overheads 2

Annual fixed overheads for 2015 are budgeted at:

Manufacturing: 600,000

Non-manufacturing 250,000

Actual production and sales for the first quarter was 45,000 units. The actual revenue and expenditure for the quarter was as follows:

Sales revenue 1,720,000

Expenditure:

Materials 365,500

Labour 375,500

Variable overhead 97,200

Fixed overheads

Manufacturing 135,000

Non-manufacturing 75,000

Paine Ltd divides the annual budget by 4 in order to produce quarterly variance analysis reports.

Required -

a) Prepare the first quarter variance analysis report showing the fixed budget, flexible budget and flexible budget variances.

b) Suggest how this report could be improved in terms of variable costs variance analysis, describing any extra information you would need in order to do so.

Reference no: EM132860610

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