Budgeting assignment 3 task 2

Stuck in budgeting assignment 3 task 2 section variable costs. I'm kind of not sure which amount to pick for flexed budget to calculate for labour. Budget labour is £125200-fixed cost £15000=110200/19000*21000=121800, is that right?


  • GeorgiaHGeorgiaH AAT Student Posts: 87
    Hi @RuhinaAzad22 what assignment are you on? Is it on the AAT site?
  • RuhinaAzad22RuhinaAzad22 Registered Posts: 7
  • RuhinaAzad22RuhinaAzad22 Registered Posts: 7
    I am doing an assignment for my tutor ( I am with premier training) and I need some help! As usual the assignment is much harder than any of the tasks in my book and I'm stuck.

    Dixon Digital produces the TB100, a computer component, and has asked you to analyse the performance of their manufacturing division as this is facing increasing competition from overseas suppliers.

    You have been given the following budgeted and actual data fot the year ended 30th September 2010:

    Budget Actual

    Sales Volume (units) 19000 19500
    Sales Revenue £ 370500 370500
    Costs £ £

    Materials 57000 60900
    Labour 125200 133600
    Power 34300 37500
    Depreciation 69000 68900
    Factory Rent 24000 25000
    Other Overheads 10000 8000

    Cost of Production 319500 333900
    Less Closing Stock (23850)
    Cost of Goods Sold 319500 310050

    Operating Profit 51000 60450
    The following is also relevant:

    Budgeted production was 19000 units whilst 21000 units were actually produced.
    Material is a variable cost.
    Budgeted labour cost includes a fixed element of £15000 and the actual fixed cost was £16000.
    Budgeted electricity cost fixed element was £5800 and the actual fixed cost was £6000.
    Depreciation included a budgeted variable element of £1.00 per unit but the actual variable cost was £0.90 per unit.
    All other overheads are a fixed cost.
    Closing stock has been valued on an absorption cost basis.

    a) Calculate the following:

    i) Budgeted selling price per unit.
    ii) Budgeted material cost per unit.
    iii) Budgeted variable labour per unit.
    iv) Budgeted total variable electricity cost.
    v) Budgeted depreciation fixed cost.
    vi) Actual selling price per unit.
    vii) Actual material cost per unit.
    viii) Actual variable labour per unit.
    ix) Actual total variable electricity cost.
    x) Actual depreciation fixed cost.
    b) Using the template, prepare a revised operating statement on a marginal costing

    it's when it comes t the actual output questions I don't know if to use the 19500 or the 21000. And with the fixed costs, I have never had 2 figures before I.e. budgeted ad actual.

    Thanks in advance
  • IrrorateIrrorate Registered Posts: 61
    The clue is in "actual" - if it's asking for actual it wants the actual production figures not budget. I assume you're OK calculating the costs per unit for actual and budget? Actual using actual budget using budget. You will need to flex the budget to account for actual units, so for your variable costs you need the costs per unit x actual units to get the flexed then compare the flexed to the actual to give a more realistic variance comparison.
  • RuhinaAzad22RuhinaAzad22 Registered Posts: 7
    Thanks I have calculated budgeted selling price per unit by 370500/19000=19.50, is that right?
  • RuhinaAzad22RuhinaAzad22 Registered Posts: 7
    Just to check before submitting