Question

Company manufacture a special tires for Fiat racing, the following is some information about the cost of March 2017

	March budget	Actual results
Number of units sold	6000	5600
Variable costs	592 for unit	1,836,800
Monthly fixed costs	432,000	400,000
Unit price	880	896

Required
Prepare budget differences

Answer 1

Answer: Below is the Budget difference between Budget and Actual results:

Particulars	March budget	Actual results	Difference	Explanation
Units	6,000	5,600	-400
Revenue	52,80,000	50,17,600	-2,62,400	Revenue= Unit price x Number of units sold
Costs
variable cost	35,52,000	18,36,800	-17,15,200	Variable cost for Marchi budget = Variable cost per unit x Number of units
Monthly fixed costs	4,32,000	4,00,000	-32,000
Total Costs	39,84,000	22,36,800	-17,47,200	Total Cost = Variable cost + Fixed cost
Operating Income	12,96,000	27,80,800	14,84,800	Operating Income = Revenue - total costs

Conclusions: The budget difference show that the Actual Operating is higher that the budgeted income by $1484800. It can be concluded that the actual performance was better than the predicted income.