Dyeing Weaving

(based on 14,40,000 MH) (based on 1,24,00,000 DMLH)

Variable costs (in Rs.)
Indirect materials 0 154,000,000
Maintenance 65,600,000 55,400,000
Utilities 75,500,000 28,900,000

Fixed costs (in Rs.)

Indirect labor 3,470,000 17,000,000
Depreciation 21,000,000 2,740,000
Other 7,230,000 58,160,000
Total Budgeted 172,800,000 316,200,000
 Revenue Budget

Product Units

Case 1 Blue rugs 200,000

Case 2 Blue rugs 185,000

Production Budget
Product - Blue Rugs
Case 1 Case 2
Budgeted Unit Sales 200,000 185,000
(+) Targeted Ending Finished Goods Inventory 0 0
Total required Units 200,000 185,000
(-) Beginning Finished Goods Inventory 0 0
Units of Finsihed goods to be produced 200,000 185,000
Selling Price Total Revenue
(in Rs.) (in Rs.) Physical Units Budget

20,000 4,000,000,000 Direct Materials required for blue rugs

20,000 3,700,000,000

Cost Budget
Available from Beginning Direct Materials Inventory
Wool : 4,58,000 skeins
Dye : 4000 gallons

To be purchased in this period

Wool : (72,00,000 - 4,58,000) skeins * Rs. 20 per skein
Dye : (1,60,000- 4000) gallons * Rs. 60 per gallon

Total Direct Materials to be used this period

Direct Material Usage Budget
Material Direct M

Wool Dye Total Activities

2,00,000
2,00,000 rugs rugs * 0.8
* 36 skeins gallons Weaving
7,200,000 160,000 Dyeing
skeins gallons
Budgeted overhead

9,618,000 Variable costs (in Rs.)

236,800 Indirect materials
Maintenance
Utilities
134,840,000
9,360,000 Fixed costs (in Rs.)
Indirect labor
144,458,000 9,596,800 154,054,800 Depreciation
Other
Total Budgeted costs
Cost driver
Budgeted overhead rate
 Direct Manufacturing Labor costs Budget

Input per Total for

unit of (2,00,000 units
output Cost * to be
Output Units produced Cost per unit of output (in Rs.) (DMLH ) Input produced)

200,000 130 62 8060 1,612,000,000

0 0 0 0 0

Budgeted overhead rate

Dyeing Weaving
(based on 14,40,000 MH) (based on 1,24,00,000 DMLH)

0 154,000,000
65,600,000 55,400,000
75,500,000 28,900,000

3,470,000 17,000,000
21,000,000 2,740,000
7,230,000 58,160,000
172,800,000 316,200,000
14,40,000 MH 1,24,00,000 DMLH
120 25.5
per MH per DMLH
 Budgeted Unit Cost of Blue rug

Cost per
unit of Input per
output (in unit of Total (in
Rs.) output Rs.)

Direct Material Wool 20 36 skeins 720

Dye 60 0.8 gallons 48
Direct Manufacturing labor Weaving 130 62
0.2hours
MH per 8060
Dyeing 0 skein *36 0 0
skein per rug
Overhead Weaving 120 = 7.21 MH 864
Dyeing 25.5 62 DMLH 1581
Total 11273
 Cost of Goods Sold Budget (Sales of 2,00,000 Blue rugs)

Beginning Finished Goods Inventory

Direct Material From Direct Materials Usage Budget

Direct Manufacturing labor from Direct Manufacturing Labor costs Budget
Overhead Weaving (Rs. 864* 2,00,000 rugs)
Dyeing (Rs. 1581* 2,00,000 rugs)
Cost of goods available for sale
(-) Ending Finished Goods Inventory
COGS

Cost of Goods Sold Budget (Sales of 1,85,000 Blue rugs)

Beginning Finished Goods Inventory
Direct Material
Direct Manufacturing labor
Overhead
Cost of goods available for sale
(-) Ending Finished Goods Inventory
COGS
From Direct Materials Usage Budget
from Direct Manufacturing Labor costs Budget
Weaving (Rs. 864* 2,00,000 rugs)
Dyeing (Rs. 1581* 2,00,000 rugs)
(Rs. 11273* 15000 rugs)
s) Budgeted Income Statement

Total (in Rs.)

154,054,800 Revenue
1,612,000,000 (-) COGS
172,800,000 Gross Margin
316,200,000 (-) Non manufacturing or Operating costs
2,255,054,800 Operating Income
0
2,255,054,800

s)
Total (in Rs.)
154,054,800
1,612,000,000
172,800,000
316,200,000
2,255,054,800
169,095,000
2,085,959,800
ed Income Statement

2,00,000 Blue Rugs 1,85,000 Blue

sold Rugs sold

4,000,000,000 3,700,000,000
2,255,054,800 2,085,959,800
1,744,945,200 1,614,040,200
0 0
1,744,945,200 1,614,040,200
Cost category

Variable cost per

Cost category jacket (in Rs.)

Direct Material costs 600

Direct Manufacturing labor costs 160
Variable Manufacturing overhead costs 120

Total Variable costs 880

 Static- Budget Variance Analysis

Level 0 and Level 1 Analysis

Static- Budget
Actual Result (1) Variances (2) = (1)-(3)

data given
Unit Sold 10,000 -2,000 2000 U
Revenues 12,500,000 -1,900,000 19,00,000 U

(given actual
revenue as Rs.
1,250 *10000)
Variable costs:
Direct Material costs 6,216,000 -984,000 9,84,000 F
Direct Manufacturing labor costs 1,980,000 60,000 60000 U
Variable Manufacturing overhead costs 1,305,000 -135,000 1,35,000 F
Total Variable costs 9,501,000 -1,059,000 10,59,000 F
Contribution Margin 2,999,000 -841,000 8,41,000 U
Fixed costs 2,850,000 90,000 90,000 U
Operating Income 149,000 -931,000 9,31,000 U

9,31,000 U
Static- Budget Variances

CM % 24.0%
 Flexible -Budget Variance Analysis

Level 2 Analysis

Flexible- Budget
Variances (5) =
Static Budget(3) Flexible Budget(4) (1)-(4)

Budgeted rate *
Budgeted Budgeted rate *
Quantity Actual Quantity
12,000 10,000 0
14400000 12000000 500,000 F Selling price Variance 5,00,000 F

Budgeted revenue Revenue is Rs

is Rs 1200*12,000 1200*10,000

7200000 6000000 216,000 U Direct Materials Variance 2,16,000 U

1920000 1600000 380,000 U Direct Manufacturing Labor 3,80,000 U
1440000 1200000 105,000 U Variable Overhead Variance 1,05,000 U
10,560,000 8,800,000 701,000 U
3,840,000 3,200,000 -201,000 U
2,760,000 2,760,000 90,000 U Fixed manufacturing Overhead 90,000 U
1,080,000 440,000 -291,000 U

2,91,000 U
nces Flexible- Budget Variance

26.7%
 Level 2 Analysis

Sales - volume Variances

(4)- (3)

-2,000 U

-1,200,000 F
-320,000 F
-240,000 F
-1,760,000 F
-640,000 U
0
-640,000 U

6,40,000 U
Sales - volume Variance
 Actual Results

Actual Input
for Actual
AI AQ output (AQ) AR

Units
Direct Materials 22.2 10000 222000 28
Direct Labor 9 10000 90000 22

22.2
AR
Direct Materials will be given 28
Direct Labor will be given 22

AI
Direct Materials will be given 22.2
Direct Labor will be given 9
 Efficiency
tual Results Price Variance AQ * BR Variance Flexible Budget

Budgeted
Input for
Actual
Budgted Actual output
AQ* AR (AR- BR)* AQ AQ * BR (AQ- BQ)*BR Input output (BQ) BR

10000
6216000 444,000 222000*30 = 6660000 -660,000 20 10000 200000 30
1980000 -180,000 90000*20= 1800000 -200,000 8 10000 80000 20

BR
Given will be givenGiven Direct Mater 30
Given will be givenGiven Direct Labor 20

Actual Input
for Actual
AO output (AQ) BI
Given 10000 222000 Direct Materwill be gi 20 Given
Given 10000 90000 Direct Laborwill be gi 8 Given
 Flexible Budget
Variance - DM and
udget DML

Budgeted
Input for
Actual
output
(BQ)*BR

10000
6000000 -216,000
1600000 -380,000

Given
Given

Budgeted Input for

AO Actual output (BQ)
10000 200000
10000 80000
 Variable cost per
Cost category jacket (in Rs.)

Direct Material costs 600

Direct Manufacturing labor costs 160

Variable Manufacturing overhead costs 120

Total Variable costs 880

 Flexible -Budget Variance Anal

Level 2 Analysis

Flexible- Budget
Actual Result Static Flexible Variances (5) =
(1) Budget(3) Budget(4) (1)-(4)

Budgeted
rate * Budgeted rate
Budgeted * Actual
data given Quantity Quantity
Unit Sold 10,000 12,000 10,000 0

Revenues 12,500,000 14400000 12000000 500,000

(given actual
revenue as Budgeted
Rs. 1,250 revenue is Rs Revenue is Rs
*10000) 1200*12,000 1200*10,000
Variable costs:

Direct Material costs 6,216,000 7200000 6000000 216,000

Direct Manufacturing labor
costs 1,980,000 1920000 1600000 380,000
Variable Manufacturing
overhead costs 1,305,000 1440000 1200000 105,000
Total Variable costs 9,501,000 10,560,000 8,800,000 701,000
Contribution Margin 2,999,000 3,840,000 3,200,000 -201,000

Fixed costs 2,850,000 2,760,000 2,760,000 90,000

Operating Income 149,000 1,080,000 440,000 -291,000

2,91,000 U
Flexible- Budget Variance
ble -Budget Variance Analysis

Level 2 Analysis Level 2 Analysis

xible- Budget
ariances (5) = Sales - volume Variances
(1)-(4) (4)- (3)

-2,000 U
Selling price Variance
F 5,00,000 F

Direct Materials Variance

U 2,16,000 U -1,200,000 F
Direct Manufacturing Labor
U 3,80,000 U -320,000 F
Variable Overhead Variance
U 1,05,000 U -240,000 F
U -1,760,000 F
U -640,000 U
Fixed manufacturing
U Overhead 90,000 U 0
U -640,000 U

0U 6,40,000 U
et Variance Sales - volume Variance