Question

QUESTION 5 (15 MARKS) Illi Corner is a family-owned kiosk that specializes in waffles with several various flavours. Data concerning the kiosk's monthly costs is as follows: Cost of waffle Cost of toppings Salaries Utilities Rent Miscellaneous Type of cost Fixed costs Variable cost per (RM) unit (RM) 0 1.50 0 1.40 1,100 0.30 800 0.20 2,200 600 0.80 0 Required: i. Prepare a flexible budget for production volume of 1,800 and 1,900 units of waffles. (6 marks)

Answer 1

1
		Flexible Budgets
	Production volume	1,800	1,900
	Cost of waffle	2,700	2,850
	Cost of toppings	2,520	2,660
	Salaries	1,640	1,670
	Utilities	1,160	1,180
	Rent	2,200	2,200
	Miscellaneous	2,040	2,120
	Total Cost	12,260	12,680
2		Flexible Budgets	Master Budget	Variance
	Production volume	1,900	1,900
	Cost of waffle	2,850	2,850	-
	Cost of toppings	2,660	2,700	40	Unfavorable
	Salaries	1,670	1,670	-
	Utilities	1,180	1,100	80	Favorable
	Rent	2,200	2,200	-
	Miscellaneous	2,120	2,300	180	Unfavourable
	Total Cost	12,680	12,820
3	Based on the report the performance of the Kiosk the fixed costs are constant and remain the same in both flexed and master budgets
	and miscellaneous cost are more than flexed budget which cost have to control by Kiosk and overall performance of the Kiosk is not
	good compare to the flexed budget.