ACC08702 Managerial Finance Assignment Questions | ENU
Assignment
- Selling and distribution overheads are partly fixed and partly variable. The fixed element in the budget is $60,000. The semi-variable costs were budgeted to have the following pattern.
| Sales units | $ |
|---|---|
| Up to 194,999 | 18,000 |
| 195,000-204,99 | 20,000 |
| 205,000-214,999 | 23,000 |
| 215,000-224,999 | 26,000 |
| 225,000-234,999 | 30,000 |
| 235,000-244,999 | 35,000 |
- Administration overheads are fixed.
- A standard selling price of $3 was set for the year.
Required:
- Restate the above profit statement, showing a flexible budget column and recalculate the variances.
- Write a report to the Managing Director interpreting your revised statement and giving the advantages of flexible budgeting over fixed budgeting for control purposes.
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Tutorial Exercise 3.8
Corporate Consulting Services operates a flexible budgeting system. The following information was obtained to produce the draft budget for the next budget period:
- The average charge-out rate of the company’s consultants is expected to be $100 per hour. However, this rate will increase by 10% if the company’s consultancy work exceeds 18,000 consultancy hours, since the company will have to employ freelance consultants to undertake additional work.
- Travel and subsistence expenses are expected to average $10 per chargeable consulting hour.
- The average annual salary of the 12 consultants employed by the company is $60,000 per annum. The consultants, who are employed on annual fixed contracts, provide a maximum of 1,500 hours per annum.
- Freelance consultants are paid $55 per hour