HND SQA 财政预算outcome3 答案.doc

Introduction This report shows the variances of direct material total, usage, price, direct labor total, rate, efficiency, and total overhead by a table and of flexed budget. And also give the recommendation and conclusion. Flex budget  Tricol Plc Flexed Budget For June 2008 Original Budget 2,000 units Flexed Budget 1,600 units Actual Results 1,600 units Variance F/A ￡ ￡ ￡ ￡ Direct materials 80,000 64,000 61,600 2,400 F Direct Labor 36,000 28,800 35,200 6,400 A Variable overheads 4,000 3,200 3,200 0 Insurance 2,200 2,200 2,400 200 A Depreciation 1,500 1,500 1,500 0 Rent and Rates 2,500 2,500 2,500 0 Administration 2,000 2,000 2,200 200 A Total 128,200 104,200 108,600 4,400 A Variances analysis The direct material usage variance is 8000(F), it shows that the flexed budget is￡8,000 more than the actual cost, as a result of the using of higher-grade materials and changing of the way of production. The direct material price variance is 5600(A), which means that the actual price is￡5600 more than the flexed budget price, because of the Tricol PLC had changed their supplier and purchase the higher-grade material lead to the price raised from ￡10 per/kg to￡11 per/kg. The direct material total = direct material usage – direct material price. As calculated above, 8000-5600=2400, the direct material total variance is￡2400. The direct labor rate variance is 3520(A), which means that the actual labor rate is￡3520 more than the flexed budget￡9 per hour to Some employees still apprentices, with poor efficiency. The direct labor efficiency variance is 2880(A), as to say, the actual labor efficiency is￡2880 more than flexed budget efficiency. It may be because the machine on the production line equipment getting old and it influence the efficiency of employees at the time of production, or maybe the culture of the company is not so well at current time, which result in reduced efficiency. The direct labor total variance is 6400(A) caused by th