Neil Patel 40068068 Unit 7 M3
M3: Analyse the impact on a budget of changes in costs & selling prices for a selected
organisation.
DECORA LTD manufactures a product for which the standard costs are as follows:
Labour: 10 hours at £8 per hour = £80
Material: 10 kg at £5 per kg = £50
Total standard cost per unit = £130
The budgeted production is 1000 units per month.
However, last month the production reached 900 units only & the actual costs were:
Labour: 9,250 hours £72,150
Materials: 8,650 kg £41,520
Actual Labour Cost per hour: = £7.80
Actual Material Cost per kg: = £4.80
Cost Cost per Budgeted Budgeted Actual Cost Variances
unit (£) Cost 1000 Cost 900 units 900 units (£)
units (£) (£)
Labour: 10 80 80000 72000 72150 -150
hours @ (Adverse)
£8 per
hour
Material: 50 50000 45000 41520 3480
10 kg @ (Favourable)
£5 per kg
Total 130 130000 117000 113670 3330
(Favourable)
M3: Analyse the impact on a budget of changes in costs & selling prices for a selected
organisation.
DECORA LTD manufactures a product for which the standard costs are as follows:
Labour: 10 hours at £8 per hour = £80
Material: 10 kg at £5 per kg = £50
Total standard cost per unit = £130
The budgeted production is 1000 units per month.
However, last month the production reached 900 units only & the actual costs were:
Labour: 9,250 hours £72,150
Materials: 8,650 kg £41,520
Actual Labour Cost per hour: = £7.80
Actual Material Cost per kg: = £4.80
Cost Cost per Budgeted Budgeted Actual Cost Variances
unit (£) Cost 1000 Cost 900 units 900 units (£)
units (£) (£)
Labour: 10 80 80000 72000 72150 -150
hours @ (Adverse)
£8 per
hour
Material: 50 50000 45000 41520 3480
10 kg @ (Favourable)
£5 per kg
Total 130 130000 117000 113670 3330
(Favourable)
