Page 16 - Microsoft Word - 00 Prelims.docx
P. 16
Chapter 1
Example 1
A business has prepared the following standard cost card based on producing
and selling 10,000 units per month:
$
Selling price 10
Variable production cost 3
Fixed production cost 1
–––
Profit per unit 6
Actual production and sales for month 1 were 12,000 units and this resulted in
the following:
$000
Sales 125
Variable production costs 40
Fixed production costs 9
–––
Total profit 76
Using a flexible budgeting approach, prepare a table (next page)
showing the original fixed budget, the flexed budget, the actual results
and the total meaningful variance.
10
