I'm so sorry for the delay, I accidentally did worksheet 25 twice as your sheets confused me a little but all done now! Hope your happy with it and let me know if you need me to clarify anything!

Handout 34
1. Production report
First we must separate the initial budget into fixed and variable expenses.
Secondly, divide the initial budget for variable expenses by the estimated production to get
your initial budget per unit produced.
I.e $45,000/5000 = $9 variable costs per unit budgeted
Then determine your actual fixed and variable expenses for the production period based on
expense records.
i.e. for production of 7000 units, fixed costs were $200,000 and variable costs were
$44,000
Then divide actual variable expenses by actual production.
I.e. $44,000/7000= $6.29 variable costs per unit actually spent
Then divide your expected revenue from initial budge by budgeted production to get
expected revenue per unit. Also work out actual revenue per unit.
i.e. expected revenue per unit = $250,000/5000 = $50 revenue per unit expected
actual revenue per unit = $300,000/7000= $42.86 revenue per unit actual
Also work out budgeted and actual fixed costs per unit.
i.e. expected fixed costs per unit = $145000/5000 = $29 fixed costs per unit expected
actual fixed costs per unit = $200000/7000 = $28.57 fixed costs per unit actual
Or an easier way is divide each of the numbers in the static budget by the number of units
(q) to establish a ratio, this allows us to work out the flexible budgets by changing q.
Static
budget

Actual
Results

Flexible budget

Variance
(between
flexible
budget
and
actual)
(-$50,000)

Favourability

+$3,000

Favourable

+$2,000
+$3,000
(-$1,000)
(-$1,000)

Favourable
Favourable
Unfavourable
Unfavourable

N. of units
Sales (50q)

5,000
$250,000

7000
$300,000

Less variable costs
(29q):
Materials(12q)
Labor(10q)
Overhead(5q)
Selling &
admin(2q)
Contribution
margin(21q)
Less fixed
costs(9q):
Manufacturing(3q)
Selling &
admin(6q)
Net income(12q)

$145,000...