The annual budget for the year ended 30 September 2007 for a production department of Morsel...
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The annual budget for the year ended 30 September 2007 for a production department of Morsel Ltd, based on a normal production level of 90 000 units, was as follows: Raw materials Direct labour a) b) c) Power Heating and lighting, including $1 000 standing charge Communications, including $1 200 standing charge Maintenance Indirect labour (at full production, 25% variable) Insurance (fixed) Full production capacity is 100 000 units. When actual production level for the year ended 30 September 2007 was 95 000 units, costs were: $ 416 000 Raw materials Direct labour Power Heating and lighting Communications Maintenance $ 396 000 225 000 36 000 3 700 4 800 72 000 48 750 2 500 Indirect labour Insurance 235 500 38 500 3 950 5300 77 000 49 500 2 550 Briefly describe how flexible budgets work. Draw up flexible budgets for 90% and 95% of production capacity, and state the over/under spending on each item of expenditure of the department at the actual production rate. Comment on the results you have calculated in b). The annual budget for the year ended 30 September 2007 for a production department of Morsel Ltd, based on a normal production level of 90 000 units, was as follows: Raw materials Direct labour a) b) c) Power Heating and lighting, including $1 000 standing charge Communications, including $1 200 standing charge Maintenance Indirect labour (at full production, 25% variable) Insurance (fixed) Full production capacity is 100 000 units. When actual production level for the year ended 30 September 2007 was 95 000 units, costs were: $ 416 000 Raw materials Direct labour Power Heating and lighting Communications Maintenance $ 396 000 225 000 36 000 3 700 4 800 72 000 48 750 2 500 Indirect labour Insurance 235 500 38 500 3 950 5300 77 000 49 500 2 550 Briefly describe how flexible budgets work. Draw up flexible budgets for 90% and 95% of production capacity, and state the over/under spending on each item of expenditure of the department at the actual production rate. Comment on the results you have calculated in b).
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A a Flexible budgets are used to create an expected spending plan for a given level of production or ... View the full answer
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ISBN: 978-0073212227
8th Edition
Authors: Ferdinand Beer, E. Russell Johnston, Jr., Elliot Eisenberg, William Clausen, David Mazurek, Phillip Cornwell
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