Fablus Limited makes a single product, the NL. It operates a standard absorption costing system. The budget for 2012 shows sales of 500,000 NLs at £0.25 giving a profit of £12,500.

Actual results for 2012:
Number of NLs actually made = 452,000 which were sold at £0.30 each.

Required:
Assuming there were no opening or closing stocks, calculate as many variances as the information will allow and present them in the form of an operating statement reconciling the actual and budget profits.

Standard absorption cost for one unit of NL: . 1 kg plastic @ 0.05/kg Materials Direct Labour Variable Overheads Fixed Overheads Standard cost of production 0.050 0.125 0.025 0.025 0.225 15 minutes @ 0.50/h 15 minutes @ O.10/h 15 minutes @ O.10/h Item Materials Direct labour Details 480,000 kg 100,000* hours @ 0.55/h Cost 18,000 Variable overheads 55,000 12,000 12,000 Fixed overheads * Due to a power cut, only 95,000 hours were actually worked.