Finance and Accounting for Managers
Fresh Juice Ltd manufactures fruit juice. One of its products, High Juice has the following standard costs per container:
                                                                              £
Direct materials (2 litres @ £1.50/lt)                   3.00
Direct labour ( ½ hour @ £25/hr)                      12.50
Fixed overheads                                                    4.00
                                                                              19.50
Selling price                                                          24.50
Standard profit margin                                           5.00
The monthly production and sales are planned to be 4,000 containers. The actual results for August were as follows:
                                                                              £
Sales revenue                                                    91,650
Less    Direct materials                               (11,408) (8,775 litres)
            Direct labour                                  (46,250) (1,850 hours)
            Fixed overheads                            (16,500)
            Operating profit                               17,492
There was no opening or closing stocks. The company manufactured and sold 3,900 containers.
Required:
a) Calculate the flexed and actual budget.
b) Calculate the following variances:
Sales variances; volume and price
Direct material variances; usage and price
Direct labour variances; efficiency and rate
Fixed overhead variance; spending
c) Present the above information as a part of a Business Report, providing possible explanations for the variances that you have calculated and suggestions as to how the company might try to improve its cost control.

Finance and Accounting for Managers Fresh Juice Ltd manufactures f...