The company "BRETTOS" uses flexible budgets to evaluate performance. The company's accountant prepared a budget for 6,000 units. Related information is given below:

	Euros
Direct materials per unit	30
Direct labor per unit	50
Indirect materials and other first raw materials per unit	10
Indirect labor per unit	15
Fixed general industrial costs	750000

Production eventually reached 7,000 units. The actual total cost
production is given below:

	Euros
Direct materials per unit	170000
Direct labor per unit	260000
Indirect materials and other first raw materials per unit	50000
Indirect labor per unit	90000
Fixed general industrial costs	750000

WANTED
1. To draw up the flexible budget, to make a comparison with the actual production costs and to calculate the variances (adverse / favorable)
2. Briefly explain how flexible budgeting can used as a performance evaluation tool
3. Briefly explain which transactions are not contained in the cash budget 

Answer rating: 100% (QA)

1 Flexible Budget and Variances To calculate the flexible budget and variances we need to compare the actual production costs with the budgeted costs for the actual production level Budgeted Costs for ... View the full answer