Question Solved1 Answer Lucid Plc had originally produced a budget on the manufacture and sale of 4,000 products. the budget is presented below: Sales £120,000 Material costs (£48,000) Labour costs (£20,000) Contribution £52,000 Fixed costs (£30,000) Profit £22,000 However, the sales and marketing department have advised that the actual sales will be in the region of 3,000 units. What is the new flexed budget profit and the volume variance based on the new information? 20500 620 500 Eurabia

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Transcribed Image Text: Lucid Plc had originally produced a budget on the manufacture and sale of 4,000 products. the budget is presented below: Sales £120,000 Material costs (£48,000) Labour costs (£20,000) Contribution £52,000 Fixed costs (£30,000) Profit £22,000 However, the sales and marketing department have advised that the actual sales will be in the region of 3,000 units. What is the new flexed budget profit and the volume variance based on the new information? 20500 620 500 Eurabia
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Transcribed Image Text: Lucid Plc had originally produced a budget on the manufacture and sale of 4,000 products. the budget is presented below: Sales £120,000 Material costs (£48,000) Labour costs (£20,000) Contribution £52,000 Fixed costs (£30,000) Profit £22,000 However, the sales and marketing department have advised that the actual sales will be in the region of 3,000 units. What is the new flexed budget profit and the volume variance based on the new information? 20500 620 500 Eurabia
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Profit22,000Flexible budget @3000 unitsProfit9,000New Flexible budget profit =9,000Volume variance =120,000-90,000=30,000 unfavorableFirst calculate selling price, material cost and labor cost per unit based on the budget.  Selling price = £120,000 ÷ 4,000 units = £30 per unit Material cost = £48,000 ÷ 4,000 units = £12 per unit Labor cost = £20,000 ÷ 4,000 units = £5 per unit Prepare flexible budget for 3,000 units ... See the full answer