The following report has been prepared for the production department of Cabinets Ltd in respect of the month of May Year 4:

The department manufactures storage cabinets. When the budget was prepared, it was expected that 1,800 units would be produced in the month but, due to a machine breakdown, only 1,600 units were produced.

Required

(a) Reconstruct the original budget, giving as much information as may be derived from the data presented above.

(b) Provide an interpretation of the performance of the production department during the month of May Year 4.

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Actual costs or Variance quantities recorded £2.80 per kg 11,200 kg £9 per hour 3.5 hours per unit £39,000 Direct materials price Direct materials usage 2,240 favourable 4,800 adverse 5,600 adverse 6,400 adverse 3,000 adverse Direct labour rate Direct labour efficiency Fixed overhead expenditure