You should attempt to answer this question yourself before looking up the suggested answer, which appears on pages 859-861 . If any part of your answer is incorrect, check back carefully to make sure you understand where you went wrong.

Bronte Ltd manufactures a single product, a laminated kitchen unit with a standard cost of £80 made up as follows:

The standard selling price of the kitchen unit is £100. The monthly budget projects production and sales of 1000 units. Actual figures for the month of April are as follows:
Sales 1200 units at £102 Production 1400 units Direct materials 22 000 sq. metres at £4 per sq. metre Direct wages 6800 hours at £5.
Variable overheads £11 000 Fixed overheads £6000 You are required to prepare:

(a) a trading account reconciling actual and budgeted profit and showing all the appropriate variances;
(13 marks)

(b) ledger accounts in respect of the above transactions

Direct materials (15 sq. metres at 3 per sq. metre) Direct labour (5 hours at 4 per hour) Variable overheads (5 hours at 2 per hour) Fixed overheads (5 hours at 1 per hour) () 45 PERCEB 20 10 5 80