- #1
Bourbon daddy
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Hi guys,
I have been tasked with the following question;
The company has set a fixed budget for Period 1 of the financial year using the following figures as being 100% of the budget:
Material costs £200 000
Labour costs £100 000
Variable overheads £50 000
Fixed overheads £50 000
Material cost, Labour costs and Variable overheads had favourable variances of:
£38 000 / £16 000 and £14 000 respectively, whilst the Fixed overheads had an adverse variance of £2 000.
a) Set out the fixed budget using the budgeted figures above, and calculate the actual figures, the variances and the trends.
Ok, so taking material costs as an example, I have to calculate the actual figures of the fixed budget (this is given as £200k).
Calculate the variance, this is a positive variance of £38k, therefore material cost was actually £200K-£38K=£162K.
Now, in calculating the trend.having done a bit of statistics in the past and am familiar with the regression formula, in which I would calculate the slope and the y intercept and insert the data into the formula;
y=a+bx
But in this instance that seems a bit long winded, am I overcomplicating this, or is it just a case of opening excel and getting on with it using the regression equation.
Regards
Joe
I have been tasked with the following question;
The company has set a fixed budget for Period 1 of the financial year using the following figures as being 100% of the budget:
Material costs £200 000
Labour costs £100 000
Variable overheads £50 000
Fixed overheads £50 000
Material cost, Labour costs and Variable overheads had favourable variances of:
£38 000 / £16 000 and £14 000 respectively, whilst the Fixed overheads had an adverse variance of £2 000.
a) Set out the fixed budget using the budgeted figures above, and calculate the actual figures, the variances and the trends.
Ok, so taking material costs as an example, I have to calculate the actual figures of the fixed budget (this is given as £200k).
Calculate the variance, this is a positive variance of £38k, therefore material cost was actually £200K-£38K=£162K.
Now, in calculating the trend.having done a bit of statistics in the past and am familiar with the regression formula, in which I would calculate the slope and the y intercept and insert the data into the formula;
y=a+bx
But in this instance that seems a bit long winded, am I overcomplicating this, or is it just a case of opening excel and getting on with it using the regression equation.
Regards
Joe