Fork pic manufactures a single product and the expected sales and production are 14,000 units for...

  

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Fork pic manufactures a single product and the expected sales and production are 14,000 units for April 2020. It is expected that 5,000 kg of raw material will be required at a total cost of £25,000. Labour hours are expected to be 8,000 hours to produce 14,000 units. Production workers are paid £10.00 an hour. Expected fixed production overheads for the month are £50,000 and are absorbed on the basis of labour hours. The expected sales price is £12 per unit. The actual results were Number of units sold Sales revenue Materials Labour Fixed production overheads Part B 13,500 £ Required a. Prepare a fixed, flexed and actual budget for April 2020, identify the variances and briefly comment on the variances. (15 marks) labour rate variance labour efficiency variance variable overhead expenditure variance variable overhead efficiency variance fixed overhead expenditure variance F = favourable variance, A = adverse variance 150,000 29,000 6,000 A 2,000 F 9,000 F 82,000 45,000 Frice plc manufactures wooden boxes. The variance analysis shown below has been produced for the production department for the last accounting period. Material price variance 3,000 F material usage variance 4,000 A 2,000 A 3,000 F In response to the variance analysis the production manager has made the following comments 1. We were experiencing poor staff morale and a high staff turnover so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company. 2. I was able to source an alternative supplier for materials. I negotiated a very good price which I believe will save the company a considerable amount of money. 3. We had a light sanding machine which I thought was not being sufficiently used and was therefore costing the business too much money. I sold this machine and hired a sander only when we needed one Required b. Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided. (20 marks) Fork pic manufactures a single product and the expected sales and production are 14,000 units for April 2020. It is expected that 5,000 kg of raw material will be required at a total cost of £25,000. Labour hours are expected to be 8,000 hours to produce 14,000 units. Production workers are paid £10.00 an hour. Expected fixed production overheads for the month are £50,000 and are absorbed on the basis of labour hours. The expected sales price is £12 per unit. The actual results were Number of units sold Sales revenue Materials Labour Fixed production overheads Part B 13,500 £ Required a. Prepare a fixed, flexed and actual budget for April 2020, identify the variances and briefly comment on the variances. (15 marks) labour rate variance labour efficiency variance variable overhead expenditure variance variable overhead efficiency variance fixed overhead expenditure variance F = favourable variance, A = adverse variance 150,000 29,000 6,000 A 2,000 F 9,000 F 82,000 45,000 Frice plc manufactures wooden boxes. The variance analysis shown below has been produced for the production department for the last accounting period. Material price variance 3,000 F material usage variance 4,000 A 2,000 A 3,000 F In response to the variance analysis the production manager has made the following comments 1. We were experiencing poor staff morale and a high staff turnover so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company. 2. I was able to source an alternative supplier for materials. I negotiated a very good price which I believe will save the company a considerable amount of money. 3. We had a light sanding machine which I thought was not being sufficiently used and was therefore costing the business too much money. I sold this machine and hired a sander only when we needed one Required b. Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided. (20 marks)

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Part a Prepare a fixed flexed and actual budget for April 2020 identify the variances and briefly comment on the variances The fixed budget for April ... View the full answer