Accounting for Managers: Interpreting accounting information for decision-making

CASE STUDIES 455

Table A3.10 White Cold Equipment PLC

Budget v. actual report Actual Budget Variance

Sales units 1,000 1,050 − 50
Price 700 700

Revenue 700,000 735,000 −35,000

Cost of production
Materials per unit £250
Materials consumed
Materials cost 245,700 262,500 16,800
Labour per unit £150
Labour consumed
Labour cost 152,250 157,500 5,250
Manufacturing overhead per unit £70
Manufacturing overhead cost 75,600 73,500 −2,100

Total manufacturing cost 473,550 493,500 19,950

Gross margin 226,450 241,500 −15,050

Selling and admin expense 183,500 190,000 6,500

Net operating profit 42,950 51,500 −8,550

Table A3.11 White Cold Equipment PLC

Flexible budget report Actual Flex

budget

Variance

Sales units 1,000 1,000 0

Price 700 700

Revenue 700,000 700,000 0

Cost of production

Materials per unit £270 £250

Materials consumed 910 1,000

Materials cost 245,700 250,000 4,300

Labour per unit £145 £150

Labour consumed 1,050 1,000

Labour cost 152,250 150,000 −2,250

Manufacturing overhead per unit £72 £70

Manufacturing overhead cost 75,600 70,000 −5,600

Total manufacturing cost 473,550 470,000 −3,550

Gross margin 226,450 230,000 −3,550

Selling and admin expense 183,500 190,000 6,500

Net operating profit 42,950 40,000 2,950