Question $4(15$ Marks$)$

Green Bottle$-$Smith is the newly appointed accountant at Happy Liquids $($Pty$)$ Ltd$.$ On his first day at Happy Liquids $($Pty$)$ Ltd$,$ he was sent an urgent email in which the CFO was looking for answers to why the company is not performing as expected. The junior accountant has given you the $2023$ budget and the $2023$ actual performance of the company.

Budget

Actual

Variance

Sales

R$1050000$

R$1010000$

R$40000$

Material

R$150000$

R$125000$

$($R$25000)$

Direct labour

$240000$

$313600$

$($R$73600)$

Variable overheads

$180000$

$208000$

$($R$28000)$

Fixed overhead

$200000$

$195000$

R$5000$

Manufacturing profit

R$280000$

R$168400$

$($R$111600)$

The budgeted sales were $30000$ units, while the actual sales were $33500$

The budgeted labour hours were $10000,$ while actual labour hours are $12000.$

Happy Liquids recently changed to a new more affordable supplier of materials.

Variable overheads include $($but not limited to$)$ the cost of the bottles, labels, electricity usage and other sundry items directly attributable to production.

Required

Respond to the CFO$$s concerns by preparing a flexed budget for the year and provide detailed comments on each of the variances noted.Question $4(15$ Marks$)$

Green Bottle$-$Smith is the newly appointed accountant at Happy Liquids $($Pty$)$ Ltd$.$ On his first

day at Happy Liquids $($Pty$)$ Ltd$,$ he was sent an urgent email in which the CFO was looking for

answers to why the company is not performing as expected. The junior accountant has given

you the $2023$ budget and the $2023$ actual performance of the company.

The budgeted sales were $30000$ units, while the actual sales were $33500$

The budgeted labour hours were $10000,$ while actual labour hours are $12000.$

Happy Liquids recently changed to a new more affordable supplier of materials.

Variable overheads include $($but not limited to$)$ the cost of the bottles, labels, electricity usage

and other sundry items directly attributable to production.