Solution-State whether the variances are adverse or

State whether the variances are adverse or favourable

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Question - Part 1 - The company, Zeto Ltd, budget committee is scheduled to meet very soon to discuss the plans for next year's budget-setting process. The company's management team manually produces the budget each year under the leadership of the chief accountant. As a result, the budget planning and production took most of the time and cost each year.

Required - Prepare a memo to the managing director of the company which:

1. explains the objectives of budgetary planning and control systems and

2. identify ways in which the budget setting process could be improved for Zeto Ltd.

Part 2 - Jack is an accountant in Zeto Ltd. He is responsible for produce the budget report. Recently he has produced the following budget report for the last month:

ITEM	Budget	Actual

Sales	72,000	68,000

Direct materials	7,000	6,500
Direct labour	20,000	20,400
Variable factory overhead	3,000	2,700
Factory rent	8,000	8,200
Total Costs	38,000	37,800

OPERATING PROFIT	34,000	30,200

Required - State whether the variances are adverse or favourable for each item in the table above. Then discuss the performance of the business based on these variances.

Reference no: EM133139519

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State whether the variances are adverse or favourable

Reference no: EM133139519

Reference no: EM133139519

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