ScholarMatic: Explanation & Answer
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Assignment to be submitted on Wednesday.
Fresh Juice Ltd manufactures fruit juice. One of its products, High Juice has the following standard costs per container:
£
Direct materials (2 litres @ £1.50/lt) 3.00
Direct labour ( ½ hour @ £25/hr) 12.50
Fixed overheads 4.00
19.50
Selling price 24.50
Standard profit margin 5.00
The monthly production and sales are planned to be 4,000 containers. The actual results for August were as follows:
£
Sales revenue 91,650
Less Direct materials (11,408) (8,775 litres)
Direct labour (46,250) (1,850 hours)
Fixed overheads (16,500)
Operating profit 17,492
There was no opening or closing stocks. The company manufactured and sold 3,900 containers.
Required:
- Calculate the flexed and actual budget.
- Calculate the following variances:
Sales variances; volume and price
Direct material variances; usage and price
Direct labour variances; efficiency and rate
Fixed overhead variance; spending
- Present the above information as a part of a Business Report, providing possible explanations for the variances that you have calculated and suggestions as to how the company might try to improve its cost control.
Please remember that all communication in respect to this Team Case Study should take place, or be recorded in, the Group Folder to which you have been assigned. Your submission for this Assignment should be posted to the Turnitin link provided. It need only be submitted by ONE team member, but we suggest that you post a copy of the Turnitin receipt to your Group Folder as ‘proof’ that the Assignment was successfully submitted by your deadline.
Due Date: End Wednesday, Day 7. Target length for main body of Business Report = 1,500 words.
ScholarMatic: Explanation & Answer
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