Budgeting is one of the most important aspects of accounting which is done by all companies. Dorothie Enel Ltd is a company based in Lusaka, Zambia. The company is so strict when it comes to budgeting issues. As a newly appointed bookkeeper for the company, you are the one who has just been delegated the responsibilities of preparing preliminary budget issues before they are finalized by the accountant. From your basic understanding of budgeting you are well versed with all types of budgeting that includes fixed and flexible budgets. You know fixed budgets do not change and flexible budgets they do flex as the level of activity changes.

The company accountant has given you the following extract from the books of the company; it contains details for the company's production budget for the upcoming month as well as the actual results for the month.

Description	Budget	Flexed Budget	Actual	Variances
	3 000 units	2 800 units	2 800 units	Fav/(Adv)
	(KWACHA)	(KWACHA)	(KWACHA)	(KWACHA)
Total Sales	198 000	?	195 600	?
Total Materials	36 000	?	30 360	?
Total Labour	49 500	?	48 360	?
Production overheads	20 400	?	21 000	?
Gross profit	92 100	?	95 880	?
General expenses incurred	45 000	?	45 240	?
Total operating profit	47 100	?	50 640	?

Further details availed:

1. Both materials and labour costs are variable costs
2. The production overheads are a fixed cost
3. General expenses are a semi-variable cost with a fixed element of K18 000.

Required: Complete the operating statement given above by flexing the budget, calculating variances and showing whether each variance is favourable or adverse