3. MegaDry is a clothing manufacturer. The budget for the year 2018 looks as follows: Units Sales revenue Fabric materials Labour Fixed overhead Profit 10,000 800,000 (450,000) (15,000 metre) (75,000) (5,000 hours) (150,000) 125,000 After completing a variance analysis in the year 2018, the following variances are reported (the labour efficiency variance equals zero): Favourable Materials usage variance of 2,700 Labour rate variance of 4,500 Unfavourable Sales volume variance of 27,500 Sales price variance of 9,000 Material price variance of 6,705 Fixed overhead variance of 5,000 The actual production in 2018 was 9,000 units and all of them were sold at the year-end. REQUIRED: (a) Provide the flexed budget and the actual performance (include the quantities for labour and materials) for MegaDry for the year 2018. (21 marks) (b) Should MegaDry investigate all variances identified? Why or why not? Interpret the following THREE variances and give TWO potential reasons for the occurrence of each one: Sales price variance; Sales volume variance; and Labour rate variance. (15 marks) (c) After interviewing the purchasing manager you found out that a different supplier was used in 2018. Discuss which variances could be impacted by this change in supplier. Consider how and why each variance may arise. (5 marks)