2 Pig Pies SARL ('PPS') is a small French company based in the south of the country, near Narbonne. PPS manufactures high-quality reasonably priced vegetarian pies. In the monthly Board of Directors' meeting the CEO is expressing his frustration that for the most recent month just passed (July) the company only made a profit of 35,680 compared to a budgeted profit of 35,000. The CEO addressed the Board, "I understand that as a direct result of our excellent new advertising campaign, the company sold 51,000 pies in July (1,000 more than budget) and we able to sell our pies at a price 2% above our budgeted price of 5.00 per pie. In addition, I know that our actual fixed costs (which includes all labour costs) of 50,000 for July were the same as budgeted. I simply do not understand why the net profit for July was only 680 more than budget." The CFO quickly answered that she would provide a reconciliation between what was budgeted for July and what the actual result for July was. She explained that her reconciliation would provide the answer to the CEO's question. Budgeted information per pie: () Selling price 5.00 Materials Grams Cost (E) per 100 grams Vegetables 125 Pastry 50 2.00 1.00 2.50 0.50 Variable costs Minutes Cost () per minute Cooking 2 0.05 0.10 Chilling 2 0.10 0.20 Contribution 1.70 The actual results for July reveal the following costs incurred for each pie: 130 grams of vegetables were used at 1.80 per 100 grams 55 grams of pastry were used at 1.10 per 100 grams 2.5 minutes were taken for cooking at 0.04 per minute 2.5 minutes were taken for chilling at 0.15 per minute Required: 1. 2. Full-screen Snip Reconcile the budgeted profit to the actual profit for July. Show all workings. (15 marks) Using the information from your reconciliation, prepare a memorandum for the CEO, detailing the reasons for the actual performance being only marginally better than budget in July despite the increased sales volume and selling price. Include in your memorandum two possible causes for each vegetable, pastry, cooking, and chilling variance identified. (15 marks - 750 maximum word limit) Total 30 marks