=+The financial results using the new standards have just become available for the year ended 31 October 1985:

Budget Actual Production (linear feet of hose) 8.0m. 8.8m.

Direct labour hours worked 20000 hrs 18000 hrs Materials used 100000lb 104000lb Costs f f Direct labour 20000 21600 Direct material 50000 62400 Overhead costs - fixed 40000 49000

- variable 60000 64000 Total costs incurred 170000 197000 Revenue from sale's 240000 264000 Net profit 70000 67000 380 Accounting {or management contral Overheads include all factory, selling and administration costs, and are applied on the basis of standard direct labour hours.

All the hose produced during the year is sold, and no inventory exists as at 31 October 1985. During the year, the sales have been greater than anticipated in the budget, but this is regarded as a temporary fluctuation.

Required:

(a) Prepare a statement analysing the differences between actual and budgeted costs and explain the most important of them.