Q8. The following data is made available for Maxwell Kitchen Appliances:
+
PARTICULARS
Average Selling price per unit
Total Direct Material Cost per Kitchen Appliance
Direct Manufacturing Labour
Direct manufacturing labour cost per hour
Average labour productivity rate (units per hour)
Direct Marketing Cost per unit
Fixed Overheads
BUDGET
AED 50
AED 19
AED 50
30
AED 4
AED 400,000
?
Sales of 150,000 units are budgeted for the month of December 2022. The
actual results are as follows:
Units Sold totalled 80% of the plan as the market has suddenly shrunk. Actual
average selling price declined to AED 47. Productivity dropped to 25 units per
hour. Actual direct manufacturing labour cost is AED 55 per hour.
Actual per unit direct material cost dropped to AED 8/-. Actual direct marketing
costs were AED 3/- per unit and the fixed costs were Rs.30,000 below the plan.
Please prepare a variance analysis based on flexible budgeting concept for the
company and present your final conclusion.
