Belinda, trading as ‘Busy Bees’ has been making soap from natural ingredients and selling it at local markets for several years. As the demand for natural products and eco-friendly packaging has increased, Belinda has decided to expand into a range of household cleaning products. She has recently moved from her own kitchen into a small rented factory and now employs three hourly paid workers.

The table below shows the expected costs of one of Busy Bees’ new products:

The actual results for the new product in its first month of production are shown in the table below:

	£
Quantity to be produced	21 batches of 20 units
Direct materials - beeswax	200g per unit at 2 pence per gram
Direct materials - other	100g per unit at 1 pence per gram
Direct labour	1 hour per batch of 20 at £12 per hour
Packaging	60cm per unit at 25pence per metre

	£
Quantity produced	386 units
Direct materials - beeswax	£2,316 at 1.95pence per gram
Direct materials - other	£386
Direct labour	£463 at £12 per hour
Packaging	£58

Required:

a) Produce a table showing the flexed budget and variances between the flexed budget and actual expenditure.

b) Calculate the variances for price and usage of beeswax.

c) Calculate the variances for rate and efficiency of direct labour.

d) Suggest actions that Belinda might take to improve future performance based on the variances calculated.
e) Describe the ways in which Belinda may be able to use learning curve theory to predict future production costs.

Answer rating: 100% (QA)

Answer a Calculation of flexible budget variance Particulars Actual data Flexible budget data Flexible budget variance ActualFlexible Quantity produced 386 units 386 units Direct materials Beeswax 231... View the full answer