North Sdn Bh manufactures and sells windows for residential properties. The accountant has provided the following...
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North Sdn Bh manufactures and sells windows for residential properties. The accountant has provided the following report and the management is concerned with the large amount of unfavourable cost variance. North Sdn Bhd Comparison of Static Budget to Actual Results For the month ended 31 December 2021 Production/Sales (units) Sales revenue Direct material Direct labour Production overheads Selling and distribution costs Administration costs Total costs Profit Additional information: (1) (ii) Static Actual Budget Results (RM) (RM) 10,500 12,000 126,000 142,800 52,500 57,000 31,500 33,600 26,000 28,000 10,200 10,300 4,200 124,400 1,600 4,600 133,500 9,300 Variances 1,500F 16,800F 4,500U 2,100U 2,000U 100U 400U 9,100U 7,700F Production overhead are RM33,000 at the maximum annual capacity of 14,000 units. Selling and distribution costs include a fixed element of RM6,000. All administration costs are fixed. Required: (a) Prepare North's flexible budget performance report for December 2021. Label each variance as favorable (F) and unfavorable (U) (b) Give your comment on the management's efficiency in controlling the cost. (c) Recommend the course of action(s) to management of North Sdn Bhd. North Sdn Bh manufactures and sells windows for residential properties. The accountant has provided the following report and the management is concerned with the large amount of unfavourable cost variance. North Sdn Bhd Comparison of Static Budget to Actual Results For the month ended 31 December 2021 Production/Sales (units) Sales revenue Direct material Direct labour Production overheads Selling and distribution costs Administration costs Total costs Profit Additional information: (1) (ii) Static Actual Budget Results (RM) (RM) 10,500 12,000 126,000 142,800 52,500 57,000 31,500 33,600 26,000 28,000 10,200 10,300 4,200 124,400 1,600 4,600 133,500 9,300 Variances 1,500F 16,800F 4,500U 2,100U 2,000U 100U 400U 9,100U 7,700F Production overhead are RM33,000 at the maximum annual capacity of 14,000 units. Selling and distribution costs include a fixed element of RM6,000. All administration costs are fixed. Required: (a) Prepare North's flexible budget performance report for December 2021. Label each variance as favorable (F) and unfavorable (U) (b) Give your comment on the management's efficiency in controlling the cost. (c) Recommend the course of action(s) to management of North Sdn Bhd.
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a Flexible Budget Performance Report for December 2021 ProductionSales units Static Budget 10500 units Actual Results 12000 units Variance 12000 10500 1500 Favorable Sales revenue RM Static Budget RM1... View the full answer
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