Question 6
ICAN
•
2022
•
PERFORMANCE MANAGEMENT
•
mixed
Case Stimulus
Production of 80,000 units and Production of 160,000 units
Direct materials: 3,200,000 N, 6,400,000 N
Indirect materials: 480,000 N, 800,000 N
Direct labour: 2,000,000 N, 4,000,000 N
Power: 720,000 N, 960,000 N
Repairs: 800,000 N, 1,200,000 N
Supervision: 800,000 N, 1,440,000 N
Rent, insurance and rates: 360,000 N, 360,000 N
Additional Information: Supervision is a “step function”. To this end, one supervisor is employed for all production levels up to and including 100,000 units. For higher levels of production, an assistant supervisor whose remuneration is N640,000 will be added.
Ezenwa Nigeria Limited is a company which produces a single product on an assembly line. The budget personnel has been availed with the following information which represents the extremes of high and low volumes of production which the company will achieve over a three month period.
Additional Information
{
"label": "Supporting information 1",
"content": "| | ₦ |\n|-----------------|----------|\n| Direct materials| 4,150,000|\n| Indirect materials| 580,000|\n| Direct labour | 2,700,000|\n| Power | 760,000 |\n| Repairs | 885,000 |\n| Supervision | 850,000 |\n| Rent, insurance and rates | 320,000 |"
}
{
"label": "Supporting information 2",
"content": "| | Production of 80,000 units | Production of 160,000 units |\n|--------------------------|----------------------------|-----------------------------|\n| | ₦ | ₦ |\n| Direct materials | 3,200,000 | 6,400,000 |\n| Indirect materials | 480,000 | 800,000 |\n| Direct labour | 2,000,000 | 4,000,000 |\n| Power | 720,000 | 960,000 |\n| Repairs | 800,000 | 1,200,000 |\n| Supervision | 800,000 | 1,440,000 |\n| Rent, insurance and rates| 360,000 | 360,000 |"
}
Requirements
(
a
)
Prepare a set of flexible budgets for presentation to the Production Director to cover the following levels of production over a period of three months:
(
b
)
During the three months July to September 2021, 100,000 units were produced. Actual costs incurred during this period were as follows:
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About This Question
This is
Ican
2022
Performance Management
Question 6.
It is one of the
mixed
questions from the
2022
Ican
Performance Management
examination.