1. Diamond Ltd makes 2 types of baseball bat the Jonny Bench (JB) and the Mickey Mantles (MM). The standard costs for these items are shown below: Standard cost JB MM Price 100.00 55.00 Variable costs Wood maple 1.5 metres @ 3 per metre 4.50 4.50 Varnish- 12 per litre 6.00 4.00 Labour (variable) @ 15 per hour 45.00 22.50 Variable overhead based on labour hours 15.00 7.50 Total variable cost 70.50 38.50 Standard contribution 29.50 16.50 Budgeted fixed overheads per month are 150,000 The monthly expected demand is 10,000 JB bats and 5,000 MM bats. The following actual activities took place during the month of April: Sales: total 1,340,000: 9,500 JB bats were sold at an average price of 110 and 6,000 MM bats were sold. Materials: Maple: 23,460 metres @ 3.25 per metre Varnish: 6,580 litres costing a total of 76,328 Labour: 36,850 hours costing a total of 560,120 Overhead: Variable 195,300: Fixed 165,000 Required (a) Calculate the budgeted net income and actual net income for April. (4 marks) (b) Calculate all possible variances for April including a sales volume mix variance. (14 marks) (c) You discover the following two factors which occurred during April: i. Diamond Ltd signed a contract with a sports retailer agreeing a price per MM bat of 48 if the sports retailer agreed to buy 2,000 bats per month including the month of April. The bats made for the sports retailer use a different varnish. In April 667 litres of this varnish costing 8 per litre was used but the costs were included as part of the varnish cost. ii. The bat turning machine became faulty, stopping production. Before the fault was detected 16 faulty JB bats were made and had to be scrapped. In addition to the time required to make the scrapped bats, 8 productive labour hours were lost whilst the machine was out of action. Identify the variances partially explained by these factors, calculate the value which is explained by the factors and the unexplained part of each affected variance. (7