Brenda and Eddie run The Italian Restaurant selling a variety of pasta dishes each using similar ingredients and taking the same amount of time to prepare. To try to control costs they instigate a standard costing system, deriving the following standard cost per meal. Ingredients (average value) 400g @$1.50/kg 0.6 Labor 30min @$4/hour 2 Variable overhead 30min @$1/hour 0.5 Fixed overhead 30min @$2.5/hour 1.25 Standard cost 4.35 Selling profit 2.60 Selling price 6.95 The overheads are absorbed on the assumption that Brenda and Eddie normally sell 100 pasta meals per day over the year during which they are open for 300 days. During one six day week, the following results are obtained: Meals sold 630 total revenue=$4500 Ingredients : bought 260kg for $380 :used 240kg Hours paid: 300 hours costing $1350 Timelost due tolate delivery of ingredients=10 hours Variable overhead $325 Fixed overhead $750 Required: (a) Calculate all the variance and interpret the possible reasons for variance. (b) Prepare an operating statement using absorption costing method and variable costing method. Reconcile the budgeted profit to the actual profit (for one week). (c) Discuss the principles for variance analysis.