ABC Company established in the year 2017 in Punjab, India. They are specialized in production of Hemz Rose Sharabat of different flavors. ABC Company is operating in a very competitive market. Though there is stiff competition ABC Company is able to beat and win the market share. The current market shares of ABC Company are 35%. To improve ABC Company financial performance the company hire Mr. John as a consultant. Mr. John provide you the following information from the book of 2019. Budgeted output 20,000 Hemz Rose Sharabat Bottle. Standard cost for one Hemz Rose Sharabat Bottle: 15 minutes boiling department labor and 30 minutes packing department labor All labor is paid at a rate of $ 7.20 per hour 2.5 liters of material at $ 3.46 per liters. Fixed overheads $ 17,000 The actual figures for the four weeks of September 2019 were: Actual output 20,000 Hemz Rose Sharabat Bottle, produced at a rate of 5,000 Hemz Rose Sharabat Bottle per week. The boiling department labor hours were as budgeted. Electricity is provided by Punjab state power corporation limited. the electricity service is not that reliable in Panjab. Due to problems with the electricity supply, the packing department labor required an extra 850 hours to complete the output. Halfway through the month, boiling department labor was awarded a 5% pay rise. The last weeks production of 5,000 Hemz Rose Sharabat Bottle used material costing $ 3.56 per liter Quantity of material used was as budgeted. Fixed overheads $ 15,730 Required:

a) Calculate, for the month of September 2019, the: i. Standard cost of one Hemz Rose Sharabat Bottle (4 Marks) ii. Actual cost of 20,000 Hemz Rose Sharabat Bottle (10 Marks) iii. Actual cost of one Hemz Rose Sharabat Bottle (3 Marks)

b) Calculate, for the month of September 2019 the: iv. Labour rate variance (5 Marks) v. Labour efficiency variance (4 Marks) vi. Total labour variance (3 Marks) vii. Material price variance (5 Marks)

c) Complete, ABC Company for the month of September 2019, the reconciliation statement of the total budgeted cost of output to the total actual cost of output. You must show clearly whether the variance is favorable or adverse. (6 Marks)

d) State three possible reasons why the fixed overheads for September in ABC Company were lower than budgeted. (3 Marks)

e) ABC Company operates a system of a 50% mark-up on cost to determine the selling price. The cost of producing each item has risen in September 2019. Evaluate whether ABC Company should continue with a mark-up on cost of 50%. (7 Marks)