Hunter-Gatherer Ltd. produces wibbits. The table below shows the budget and actual units sold, together with standard costs and actual costs for materials and labour used in the manufacture of wibbits.

Assume that the quantity of materials purchased and the quantity used are identical.

a. Produce a report that compares the original budget with actual costs for materials and labour in July.

b. Produce a actual versus bucget variance report using a flexible budget and calculate the variances on that basis.

c. Calculate both usage and price variances for both materials and labour.

d. Explain why variance analysis using a flexible budget may be helpful for management control.

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Hunter-Gatherer Ltd.: Data for July Budget Actual Units of finished wibbits sold 5,000 4,500 Material required (kg per wibbit) 1.5 1.7 Material costs per kg $12.50 $13.00 Labour hours required (hours per wibbit) 1.2 1.3. Labour costs per hour $14.00 $13.90