KHL manufactures a single product and operates a budgetary control system that reports performance using variances on a monthly basis. The company has an agreement with a local suppler and calls off raw materials as and when required. Consequently there is no inventory of raw materials.

The following details have been extracted from the budget working papers for 2011:

The following actual performance relates to February 2011:
$ $
Sales revenue (5 700 units) 330 600 Direct materials (18 600 kgs) 70 680 Direct labour (11 500 hours) 128 800 Variable overhead (11 500 hours) 47 150 Fixed overhead absorbed 60 000 306 630 Finished goods inventory adjustment 15 000 291 630 Gross profit 38 970 Fixed overhead over-absorption 3 000 Profit 41 970 For February 2011 budgeted sales were 6 000 units, the selling price variance was \($34\) 200 Adverse and the sales volume profit variance was \($4\) 200 Adverse. The actual fixed overhead incurred was \($57\) 000.
Budgeted profit for February 2011 was \($84\) 000.
Required:
Prepare a statement for February 2011 that reconciles the budgeted profit of \($84\) 000 with the actual profit of \($41\) 970.
You should show the variances in as much detail as possible given the data provided.

For February 2011 budgeted sales were 6 000 units, the selling price variance was \($34\) 200 Adverse and the sales volume profit variance was \($4\) 200 Adverse. The actual fixed overhead incurred was \($57\) 000.
Budgeted profit for February 2011 was \($84\) 000.
Required:
Prepare a statement for February 2011 that reconciles the budgeted profit of \($84\) 000 with the actual profit of \($41\) 970.
You should show the variances in as much detail as possible given the data provided.

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Annual Activity (units) 50000 70000 90000 $000 $000 $000 Sales revenue 3200 4480 5760 Direct materials (3 kgs per unit) 600 840 1080 Direct labour (2 hours per unit) 1000 1400 1800 Variable overhead (2 hours per unit) 400 560 720 Fixed overhead (2 hours per unit)" 600 600 600 *The fixed overhead absorption rate of $5 per hour was based on an annual budget of 60000 units of the product being produced at a constant monthly rate throughout the year, with the fixed overhead cost being incurred in equal monthly amounts.