BS Limited, manufactures a single standard product and operates a system of standard costing using a fixed budget. As the companys assistant cost accountant, you are responsible for preparing the monthly operating statements. Details from the budget, the standard product costs and actual results for the month ended 31 May 2003 are given below:

Budgeted and standard cost information

1. Budgeted sales and production for the month: 10,000 units

2. Standard cost of each unit of product:

Direct material: X: 10kg at Sh. 10 per kg.

Y: 5kg at Sh. 50 per kg.

Direct wages: 5 hours at Sh. 30 per hour.

3. Fixed production overhead is absorbed into production at a rate of 200% of direct wages.

4. Budgeted sales price has been estimated to give a profit of 20% of sales price.

Actual results for the month ended 31 May 2003:
Production Sales	9,500 units 9,500 units sold at a price of 10% higher than budgeted

Direct materials consumed:

X: Y:

96,000kg at Sh. 12kg 48,000kg at Sh. 47 per kg

Direct wages paid: 46,000 hours at Sh. 32 per hour.

Fixed production overhead incurred: Sh. 2,900,000.

Required:

The operating statement for the month of May, 2004 showing:

(a) The budgeted profit: (2 marks)

(b) Variances for direct materials, direct wages, overheads and sales. (15 marks)

(c) The actual profit (3 marks)