The budgeted and actual results of Powers Inc. for the month of June were as...
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Accounting
The budgeted and actual results of Powers Inc. for the month of June were as follows. The company uses a marginal costing system. There were no opening and closing inventories.
Static Budget | Actual Results | |||
Sales & Production | 2,500 units | 2,000 units | ||
$ | $ | $ | $ | |
Sales | 60,000 | 51,000 | ||
Direct materials | 12,500 | 12,000 | ||
Direct labour | 10,000 | 8,000 | ||
Variable overhead | 5,000 | 4,500 | ||
Other Costs | 5,000 | 5,500 | ||
Rent & Rates | 7,500 | 7,000 | ||
Total Costs | 40,000 | 37,000 | ||
Profit/Loss | 20,000 | 14,000 | ||
The following information relates to cost behavior: Other costs consist of fixed costs of $2,000, plus a variable cost of $1.50 per unit made and sold.
What are the Flexible Budget’s Profit/Loss, and the related Variance when compared to the Actual Results’ Profit?
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