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Control Report for Chimco Ltd ItemsCost per unitOriginal (£)Flexed (£)Actual (£)VarianceUnits 120,000100,000100,000 Selling price353535305UFRevenue 4,200,0003,500,0003,000,000(500,000) UFVariable costs:     Materials3.50 420,000350,000380,000(30,000) UFLabour5600,000500,000540,000(40,000) UFOverhead2.50300,000250,000250,0000Contribution242,880,0002,400,0001,830,00057,000UFFixed overheads:     Warehouse rental 350,000350,000200,000150,000FInsurance 150,000150,000150,0000Fulltime supervisor salary 60,00060,00045,00015,000 FProfit 2,320,0001,840,0001,435,000405,000UF (i) Prepare the monthly control report showing original budget, flexed budget, and variances. (ii) Using your control report prepared in (i) above, prepare a report on Chimco’s performance during the year 2020. a) unfavourable variances for revenue, materials and labour. b) Chimco ltd may have reduced price in order to increase sales due to Covid 19. c) Need to investigate why certain costs are up. Is it due to regulations, if so, what can be done? d) Need to consider if the lower warehouse and supervisor salary are sustainable. (iii) Provide recommendations to Chimco’s CEO on areas of improvement. a) Need to enter into long term contracts with warehouse owners to ensure rentals are not increased significantly in the nearest future. b) Outsourcing production to low-cost countries may reduce costs. c) Reducing prices of Hats may not be a sustainable strategy.