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    Production Budget and Variances

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    (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)

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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