HND财政预算答案

Part A(i)Tricol plcFlexed BudgetFor JuneOriginal Budget2,000 unitsFlexed Budget1,600 unitsActual results1,600 unitsVarianceF/ADirect Material80,00064,00061,6002,400FDirect Labour36,00028,80035,2006,400AVariable Production Overheads4,0003,2003,2000Insurance Costs2,2002,2002,400200ADepreciation15,0001,5001,5000Rent and Rates2,5002,5002,5000Administration Overheads2,0002,0002,200200ATotal104,200108,6004,400A(ii)Direct material total variance(standard units of actual productionstandard price) (actual quantityactual price)(4kg1600)10 61600= 64000 61600=2400 ( F )The rate for direct material total variances is 2,400/ 64,000100%=3.75%3%Direct material price variance actual quantity( standard priceactual price) =5600kg( 10- 11) =5600kg1 =5600 (A)The rate of direct material price variance is 5,600/ 64,000100%=8.75%3%Direct material usage variance standard price(standard units of actual production-actual units) =10(4kg1600-5600kg) =10800kg =8000 (F) The rate of direct material usage variance is 8,000/ 64,000100%=12.5%3%Note: When adding the price and usage variances the result must equal the total variance. Therefore, 5600(A) (price)8000(F) (usage) = 2400(F) (total).Direct labour total variance ( standard hours of actual productionstandard rate ph) (actual hoursactual rate ph) (2h1600)9 (3520h10) =(3200h9)35200 =28800 35200 =6400(A)The rate of diretc labour variance is 6400/28800100%=22.2%3%Direct labour rate variance actual hours( standard rate phactual rate ph) 3520h(910) =3520h1 =3520(A)The rate of direct labour rate variance is 3,520/ 28,800100%=12.2%3%Direct labour efficiency variance standard rate ph ( standard hours of actual production actual hours) 92h16003520h =9(3200h3520h) =9320h =2880(A)The rate of direct labour efficiency variance is 2,880/ 28,000100%=10%3%Note: When adding rate and efficiency variances the result must equal the total variance. Therefore, 3520(A) (rate)2880(A) (efficiency) = 6400(A) (total).Overhead total variance (standard insurance costactual insurance cost)(standard administration overheadsactual administration overheads) (22002400)(20002200) =200(A)200(A) =400(A)The rate of overhead total variance is 400/ 4,200100%=9.52%3%(iii)AnalysisMaterial varianceFrom the actual budget, we can see that the direct material total variance is 2,400(F). The Direct material usage variance is 8,000 (F),the Direct material price variance is (5,600)(A).The possible reasons for material usage variances are include:Use new machinery.Use higher qualityThe possible reasons for material price variance:Change suppliers.Use higher quality material.Loss of discountLabour varianceThe direct labour total variance is (6,400) (A) ,the Direct labour efficiency variance is (2,880) (A) and the Direct labour rate variance is(6,400) (A). The possible reason for direct labour efficiency variance:Lower grade workforceShortage of skilled labor The possible reason for direct labour rate varianceHigher grade workforcesShortage of skilled labourOverhead varianceThe total overhead variance is (400)(A). The Insurance and Administration variances are (200)(A). The total overhead variance is (400)(A).The possible reasons for overhead variances:Using new machineryIncreased administration costTo conclude a higher-than-expected wage settlement for production operates.Difficult trading conditionsIntensely competitionRecommendationAccording to above analysis, we can easily understand the organizations current situation. In order to achieve the lower costs and high profit here some recommendations divided in three sections which in clued material variances, labour variances as well as the overhead variances.The recommendation for material variances:Investigate the cheaper material.Hold a staff training program to increase their work efficiency. Negotiate with current supplier in order to achieve lower price. The recommendation for labour variances:Provide training program to staff for higher skill of operating the new material. Consider about the lower grade labourThe recommendation for overhead variances:try to decrease the administration cost Teach the staffs scientifically use these overhead in order to make it longer-used. Part BPayback period method:Year Anuual cash flowCumulative 0(1,000,000)(1,000,000)1160,000 (840,000)2160,000 (680,000)3320,000 (360,000)4320,000 (40,000)5(1/8 of 320,000)40,000 NIL 5（7/8 of 320,000)28