Carrypack Ltd manufactures and sells plastic cases for portable computers. Production each month equals sales orders received. The following monthly budget was prepared at the start of Year 6, to apply throughout the year:

Further information

(a) Budgeted direct materials used per month were set at 26,400 kg.

(b) Budgeted direct labour hours per month were set at 36,000 hours.

The following actual report was produced for the month of April Year 6:

Further information

(a) Actual direct materials used during April were 27,800 kg.

(b) Actual direct labour hours worked during April were 38,000 hours.

Required

(a) Prepare an explanation, using variances, of the difference between the budgeted profit and the actual profit for the month of April.

(b) Comment on possible causes for the variances you have calculated.

Transcribed Image Text:

Units 12,000 12,000 £ Sales (@ £50 per unit): 600,000 Production: Production costs: Direct materials 132,000 108,000 72,000 48,000 Direct labour Variable overheads Fixed overheads 360,000 240,000 Budgeted profit