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Production Budget and Variances

(See attached file for full problem description)

Meenibuck 2000 units
Teenibuck 2400 units
Deluxibuck 1800 units

It has now been discovered that the supply of material X is limited to 38 000 Kilos.

a) Calculate the contribution per kilo of material X used for each product.

b) Prepare a production budget based on your calculation in (a) to give maximum profit from the
material available.
C)Calculate the following variances:
1) Total direct material variance
2)Total direct labour variance
3)Total direct expenses Variance
4)Sales volume Variance

Using the variances calculated in C prepare an accounting statement reconciling the profit
which would have been obtained from the original budget and the profit expected from the budget in (b)


Solution Summary

Then solution explains how to prepare a production budget and calculate the following variances - Total direct material variance, Total direct labour variance, Total direct expenses Variance and Sales volume Variance