Calculate the variances and complete the Standard Costing Profit Statement for Year 1

8. Read the following questions and respond on the supplied worksheet.
McLaughlin Ltd employs conventional costing. The information below pertains to Year 1.
Budget Actual Income:
Sales £700,000 £884,000
Selling Each item costs £35 or £34
Costs:
Units of Direct Materials Kg 13,000 kg of materials were consumed at a cost of £5 per kg.
Cost of all the materials: £128,700
Direct labor hours per unit 12 Cost per hour £12 Worked hours 32,000
$400,00 in labor costs overall
Overheads
Contingent £40,800 $45,000
Fixed £50,400 £70,000
Every overhead expense is recouped at a rate based on the direct labor hour.
(a) Determine the projected profit for the first year.
(b) Determine the real profit for the first year.
(c) Determine the average cost for Year 1’s actual sales.
(d) Completing the Standard Costing Profit Statement for Year 1 by calculating the variances.