Budget ( may)Actual (May)Variances (May)
Output (production and sales)1300 units yard units (20000/20)300units
£ £
Sales revenue26000200006000 adverse
Direct Materials(7800) (2600Kg)(6500) (2100Kg)1300 favourable(500kg)
Direct take(6500) (650hrs)(5250) (500hrs)1250 favourable
(150hrs)
Fixed Overheads(3250) (1300x2.5)(3100) (1000x2.5)150 favourable
Operating Profit8450 51503300 adverse
From the assign calculations, it is obvious that our budgeted profit has non been achieved and as such we give birth not achieved our objective of delivering an anticipated profit margin for the month, correspond Operating Profit Variances which shows £3300 (adverse). However there are otherwise variances which show a favourable position however this does not always suggest that this represents an upturn in performance in these areas, Atrill and McLaney (2009) p221. In order for us to have clarity on the motive why this situation has occurred and in an attempt to draw the conciliate conclusions before agreeing on any necessary actions to ensure that we correct the situation in the future we need to be in truth clear on where the difficulties are and to find explanations as to why.
In order to deduce a more level acting field to ascertain the adjusted situation regarding performance we flush toilet flex our budget had it planned to deliver against a rewrite output production of 1000, the actual output for May. Flexing a budget allows us to provide a set of revised figures set against an alternative output level, in this case 1000. This represents a 31% downturn in operating profit against our planned May budget. Atrill and McLaney (2009) p221. In our case sales revenue, direct materials, direct labour. magic spell the overheads are fixed per unit of output this will to a fault see a variance overall as a result of change to output. In order to achieve this we flinch the...If you want to get a full essay, order it on our website: Orderessay
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