Desconins Ltd is a furniture manufacturer. One of its products, a table, has the followingstandard costs:Â£Direct materials (8m @ Â£3/m)24.00Direct labour (1 hour @ Â£25/hr)25.00Fixed overheads16.0065.00Selling price95.00Standard profit margin30.00The table is made from solid oak and the above materials reflect the size of the table in squaremetres.The monthly production and sales are planned to be 800 units. The actual results for Marchwere as follows:Â£Sales revenue75,330LessDirect materials(19,250)(7,000m)Direct labour(22,100)(850 hours)Fixed overheads(13,000)Operating profit20,980There was no opening or closing stocks. The company manufactured and sold 810 tables.Required:a) Calculate the flexed and actual budgetb) Calculate the following variances:Sales volume variancesSales price variancesDirect material usage variancesDirect material price variancesDirect labour efficiency variancesDirect labour rate variancesFixed overhead spending variancec) providing possible explanations for the variances that you have calculatedd) suggestions as to how the company-Desconins Ltd. might try to improve its costcontrol.
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