(a) Calculate the following variances for Product RN8 during June, and reconcile the budgeted profit to the actual profit : 1. Sales price variance 2. Sales volume variance 3. Materials price variance 4. Materials usage variance 5. Direct labour rate variance 6. Direct labour efficiency variance 7. Fixed overhead spending variance

b Please state the importance/usefulness of budget

Max plc had the following budget and actual figures for Product RN8 during June: Budget Actual Output 1,000 units 1.400 units (production and sales) Sales revenue Raw materials Labour Fixed overheads Operating profit 130,000 -45.000 -60,000 -5,000 20,000 15.000 kgs 5,000 hours 175,000 -60.500 -74.800 -6,000 33.700 22.000 kgs 6,800 hours