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| Villa Homes Villa homes designs, manufactures and assembles furniture. The furniture is for domestic homes and therefore varies considerably in size, complexity and value. One of the departments in the company is the assembly department. This department is labour intensive; the workers travel to various locations to assemble and fit the furniture using the packs of finished timbers that have been sent to them. Budgets are set centrally and they are then given to the managers of the various departments who then have the responsibility of achieving their respective targets. Actual costs are compared against the budgets and the managers are then asked to comment on the budgetary control statement. The statement for April for the assembly Department is shown below.  The manager of the assembly department is new to the job and has very little previous experience of working with budgets but he does have many years’ experience as a supervisor in assembly departments. Based on that experience he was sure that the department had performed well. He has asked for your help in replying to a memo he has just received asking him to 'explain the serious overspending in his department'. He has sent you some additional information about the budget: (1) The budgeted and actual assembly labour costs include the fixed salary of $2,050 for the manager of the assembly department. All of the other labour is paid for the hours they work. (2) The cost of furniture packs and other materials is assumed to vary in proportion to the number of assembly labour hours worked. (3) Working papers for the budget showed the impact on the overhead costs of differing amounts of assembly labour hours:  The actual fixed costs for April were as budgeted.(a) Prepare, using the additional information that the manager of the assembly department has given you, a budgetary control statement that would be more helpful to him. (8 marks) |