Page 305 - Microsoft Word - 00 Prelims.docx

Chapter 15

Answers

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.

299