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A - Prepare a flexible budget for the quarter ended 30 september 2020 clearly indicating the variances

B - comment on the variances calculated above with possoble reasons for such variances

Blue Ocean is a recently started business providing boat safari in Mirissa and currently, operates with one boat. The owner has allocated cost budgets for the quarter and wanted to identify the differences in actual results from the budgets on completion of the quarter. The following information shows the fixed (static) budget and actual results for the quarter ended 30 September 2020. Cost Fuel (Direct Material) Captain (Direct Labour) Marine pilot (Direct Labour) Life guard (Direct Labour) Service and maintenance Insurance Route charges Tour guide charges Fixed Budget Actual Results LKR LKR 918,000 730,800 408,600 345,300 601,200 510,000 260,100 219,000 290,000 305,000 430,000 440,000 808,000 587,500 375,000 352,500 4,090,900 3,490, 100 Fixed budget has been prepared for two tours per day. However, 150 tours in total (actual) were operated for the quarter ended 30 September 2020. Following behaviour of the costs was also identified Fuel (Direct Material) LKR 5,100 per tour Captain (Direct Labour) LKR 2,270 per tour Marine pilot (Direct Labour) LKR 3,340 per tour Life guard (Direct Labour) LKR 1,445 per tour Service and maintenance LKR 290,000 for the quarter Insurance LKR 430,000 for the quarter Route charges consist of LKR 4,100 variable cost per tour and a fixed cost (the route licence) of LKR 70,000 for the quarter Tour guide charges consist of LKR 1,500 variable cost per tour and a fixed payment of LKR 105,000 per quarter

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