Brighton North management has recently appointed a new general manager. Malisa White, to look after the new plant Mi White has noticed that the company's profit has been declining and the company is experiencing problems. After further investigation, M White found that the spinning car wheels that have been launched last year are no longer profitable The company accountants prepared the June contribution format income statemenit for spinning wheels as below Flexible Budget $675,000 $675,000 Actual Sales (15,000 spinning wheels) Variable expenses: Variable cost of goods sold Variable selling expenses Total variable expenses Contribution margin Fixed expenses Manufacturing overhead Selling and administrative Total fixed expenses Net operating income (loss) "Canteina direct moteriots, alrect labaut, and variable manufecturing averhead 435,000 20.000 455.000 220,000 461,890 20.000 481 890 193,110 130,000 84,000 214.000 214.000 S6.000 S120 890) 130,000 B4,000 The new general manager, Lisa White, has been given instructions to "get things under control Upon reviewing the income statement, Ms White has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard costs per spinning car wheel Standard Price Standard Cost $5.00 per kg 5 15.00 12.80 Standard Quantity or Hours 3.0 kes 08 hours $16.00 per hour 04 hours or Rate Direct materials Direct labour Variable manufacturing overhead Tatal standard cost per unit 53.00 per hour 120 $29.00 Besed on mochine-houre During lune, the company produced 15,000 spinning car wheels and incurred the following costs a Purchased 60,000 kilograms of materials at a cast of 54.95 per ke b Used 49,200 kilograms of materials in production. (Finished godds and work in process inventories are insignificant and can be ignored.) c Worked 11,800 direct labour-hours at a cost of S17 00 per hour d. Incurred variable manufacturing overhead cost totaling S18,290 for the month. A total of 5,900 machine-hours was recorded. It is the company's policy to close all variances to cost of goods sold on a monthly basis Required: As a Management Accounting Team, Ms White has asked you to: 1. Calculate the following variances for June: a. Materials price and quantity variances. b. Labour rate and efficiency variances. c. Variable overhead spending and efficiency variances. 2. Summarise the variances that your team calculated in (1) above by showing the net overall favourable or unfavourable variance for the month. What impact did these figures have on the company's income statement? Show your calculations. Select the two most significant variances that your team calculated in (1) above. Explain to Ms. White the possible causes of these variances.