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Part 2 Scenario Mega Manufacturers produces one specialized product, the Mega95, and prepared the following information for the month: Budget for periodActual for period Sales 1600 units at $80 each1500 at $82 Production1600 units1550 units The standard cost card for the Mega95 is $ per unit Direct materials (6 lbs at $3) 18 Direct labour (4 hours at $5) 20 Variable overheads (4 hours at $3 per hour) 12 Fixed overheads (4 hours at $2 per hour) 8 Total standard cost 58 Standard Profit 22 Standard Selling Price 80 During the month, the following amounts were incurred: $ Material purchases (10,000 lbs)33,000 Direct wages (6,000 hours)31,400 Variable overheads17,500 Fixed overheads12,800 Materials issued to production was 9,600 lbs Required: 1. Comparing budgeted to actual results, calculate the following variances using the information above i.Material Price ii.Material Usage iii.Labour rate iv.Labour efficiency v.Variable overhead expenditure vi.Variable overhead efficiency vii.Fixed Overhead Expenditure viii.Fixed Overhead Volume ix.Sales margin price variance 2. Analyse the variances and suggest possible reasons for the variances. Part 3 Scenario Northstar Limited manufactures a single product, which it calls the Compass360. As the Financial Controller, you have collected the following information in preparation for drawing up the annual budget for the year ended 31 December 2021. Sales budget details for the Compass360: · Expected selling price per unit $150 · Expected sales in units: 25,000 · All sales are on credit terms The Compass365 requires 8 units of raw material S and 5 units of raw material N. Material S is expected to cost $7 per unit, and N will cost $12 per unit. All goods are purchased on credit terms. Two departments are involved in producing Compass360: Cutting and Finishing. The following information relates to those two departments: Direct labour per unit of product (hours) Direct labour rate per hour ($) Cutting 2 $7 Finishing 1 $5 The finished production overhead costs are expected to amount to $200,000 for the year. At 1 January 2021, 600 units of Compass360 are expected to be in stock at a value of $75,000. In addition, there will be an expected 3,800 units of raw material S, and 1,700 units of raw material N. Finished goods are planned to be 15% above the opening stock level as at 1 January 2021, whereas material S stock should increase 10% and item N by 5%. Selling, general and administrative expenses are expected to be $225,000. Other relevant information: · Opening trade debtors are expected to be $260,000. Closing trade debtors are expected to amount to 10% of the total sales for the year. · Opening trade creditors are expected to be $30,000. Closing trade creditors are expected to amount to 5% of the purchases for the year. · All other expenses will be paid in cash during the year. · Other balances as at 1 January 2021 are anticipated to be as follows: $ $ Share capital: Ordinary shares 375,000 Retained profits 174,645 Proposed dividend 100,000 Fixed assets at cost500,000 Less: Accumulated depreciation150,000 350,000 Cash at bank and in hand 186,000 Capital expenditure will amount to $180,000, payable in cash on 1 January 2021. Fixed assets are depreciated on a straight-line basis at a rate of 10% per annum on cost Required: 3.1 Prepare all the relevant budgets for Northstar for the year to Ended 31 December 2021. These include: a) Sales budget b) Production budget c) Direct materials usage budget d) Direct materials purchases budget e) Direct labour budget f) Fixed production overhead budget g) Calculate the value of the closing raw material stock h) Calculate the value of the closing finished stock i) Selling, General and Administration budget j) Capital expenditure budget k) Calculate cost of goods sold l) Cash budget 3.2 Upon completion of the above, prepare the following: m) Budgeted Profit and Loss Account n) Budgeted Balance Sheet 3.3 Write a report to the Managing Director of Northstar explaining: 1. the main types of budgets used; 2. providing an analysis of the main purposes of budgeting as a management tool in planning and control; 3. assessing the viability of the completed budgets based on the scenario above; and 4. evaluating the advantages and limitations of costing and budgetary control systems to Northstar. Other instructions In your submission, ensure that sources of research information are properly cited within the body of the report and that a Reference List using the Harvard Referencing Style is provided. Please include an appropriately completed cover page and ensure that the work is checked thoroughly for grammatical errors prior to submission. Please place all work in one document including the cover page, with your first and last name in the electronic document submission file name. Deadline: 1 November 2021 Checklist of evidence required Financial Statements Report Criteria covered by this task: Unit/Criteria reference To achieve the criteria you must show that you are able to: A.P1 Categorise and explain different costs and costing methods in given scenarios. A.P2 Produce accurate absorption and marginal cost statements for given scenarios. A.M1 Assess the appropriateness of absorption and marginal costing techniques used for decision making in given scenarios. A.D1 Make justified recommendations to improve the financial performance of the business in the given scenarios. B.P3 Calculate sub- and overall variances in given scenarios using standard costing. B.M2 Analyse the reasons for the variances in given scenarios C.P4 Explain how budgeting is used in a selected business for financial planning and control. C.P5 Prepare accurate subsidiary and master budgets in a given scenario. C.M3 Assess viability of the completed budgets in a given scenario. BC.D2 Evaluate the usefulness of costing and budgetary control systems to the business. Sources of information to support you with this Assignment www.accountingcoach.com www.accountlearning.blogspot.com www.bbc.co.uk/bitesize www.careerride.com www.ehow.com www.smallbusiness.chrom.com www.businesscasestudies.co.uk The Times 100 has economics and business case studies. The site also has a selection of theory notes aimed at learners. Other assessment materials attached to this Assignment Brief N/A