Question 6
ICAN
•
2025
•
PERFORMANCE MANAGEMENT
•
mixed
Case Stimulus
Egoyibo 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.
Production of 80,000 units | Production of 160,000 units
Direct materials | 6,400,000 | 12,800,000
Indirect materials | 960,000 | 1,600,000
Direct labour | 4,000,000 | 8,000,000
Power | 1,440,000 | 1,920,000
Repairs | 1,600,000 | 2,400,000
Supervision | 1,600,000 | 2,880,000
Rent, insurance and rates | 720,000 | 720,000
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 remunerations is N1,280,000 will be added.
Additional Information
{
"label": "Supporting information 1",
"content": "| | Production of 80,000 units | Production of 160,000 units |\n|------------------------|----------------------------|-----------------------------|\n| | ₦ | ₦ |\n| Direct materials | 6,400,000 | 12,800,000 |\n| Indirect materials | 960,000 | 1,600,000 |\n| Direct labour | 4,000,000 | 8,000,000 |\n| Power | 1,440,000 | 1,920,000 |\n| Repairs | 1,600,000 | 2,400,000 |\n| Supervision | 1,600,000 | 2,880,000 |\n| Rent, insurance and rates | 720,000 | 720,000 |"
}
{
"label": "Supporting information 2",
"content": "| | ₦ |\n|------------------------|----------|\n| Direct materials | 8,300,000|\n| Indirect materials | 1,160,000|\n| Direct labour | 5,400,000|\n| Power | 1,520,000|\n| Repairs | 1,770,000|\n| Supervision | 1,700,000|\n| Rent, insurance and rates | 640,000 |"
}
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 2024, 100,000 units were produced. Actual costs incurred during this period were as follows:
Detailed Solution & Marking Scheme
Get the step-by-step solution,
key points required by examiners
and detailed marking guidance
through the Edcrib AI Tutor.
Reveal Answer
About This Question
This is
Ican
2025
Performance Management
Question 6.
It is one of the
mixed
questions from the
2025
Ican
Performance Management
examination.