Question 1 (25 Marks)

REQUIRED

Use the information provided below to prepare the following for June 2020:

1.1. Flexible budget for TWO (2) different activity levels i.e. 20 000 and 25 000 units (9 marks)

1.2. Performance report (11 marks)

1.3. Comment on the following variances:

1.3.1. Sales (1 marks)

1.3.2. Direct Material (2 marks)

1.3.3. Fixed overheads (2 marks)

INFORMATION Magna Ltd manufactures a single product. It originally planned to produce and sell 16 000 units during June but the actual activity level was 18 000 units. The budgeted and actual income and cost for June are as follows:

	Original Budget	Actual results
volume	16 000 units	18 000 units
	R	R
Sales	1 920 000	2 340 000
Cost of Sales	(1 651 200)	(2 044 000)
Direct Materials	800 000	1 008 000
Direct Labour	560 000	702 000
Variable Overheads	192 000	162 000
Fixed overheads	99 200	172 000
Gross Profit	268 800	296 000