Reference no: EM133164379

Question - Mokoena has had problems in the past because of a lack of budgetary control. There were always big discrepancies between the budgeted results and the actual results. You have been employed as a management accountant at Mokoena Ltd. since the beginning of the year. This will be your first presentation to management. You have discussed the concepts of budgetary control with your boss and informed him that flexible budgets should be prepared to compare the actual and budgeted results. After further enquiries from your boss, you informed him that the main reason to prepare flexible budgets is that different costs react differently when a change in the budgeted and actual production units occur. The following budgeted information, at different production levels, is available:

Mokoena produced 11 300 units during 2017. The following actual costs were incurred during this period:

Required -

1. Determine whether the behaviour of each of the budgeted cost items are either fixed, variable or mixed.

2. Determine the variable cost per unit and the total fixed cost for the cost item/(s) identified in 6.1 as amixed cost. Use the high-low method.

3. Prepare a flexible budget at 11 300 units and determine all the variances at this level.