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Production Budget and Variances

(See attached file for full problem description)

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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.

Required
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)
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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

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