C. Safety First is rearranging its store and wants to ensure that they make the best use of the limited space available to maximise sales possibilities. They have 150 metres of space available, and the 3 products use up space as follows: Section 4: Budgeting (TOTAL: 25 MARKS) Bitcom Limited had undertaken the following budget planning. The budget is planned to sell 700 boxes at $700 each. The budget shows that it takes 20 kg of raw material to produce 1 box of the product. Each kg costs $14. The direct labour costs are budgeted at 10 hours per box produced, and the hourly rate for direct labour is $10. Fixed production and fixed administrative expenses are budgeted at 140,000 and 60,000 each. You have also been provided actual income statement information for the month of December 2020 (See the Table below). Life Jackets Life Vests Buoyancy Aids $60 1.5 Contribution margin per product Minimum shelf space required per product $75 2.5 $80 1.2 How should the shelf space (150 metres) be allocated to the 3 products to maximise the profits? Justify your reasons for the space allocation using the relevant figures calculated above. [8 marks] Required: 1. Calculate the budgets alongside the actual results for the month of December 2020, calculate the individual variances, and indicate whether each variance is favourable or unfavourable. [15 marks] Budget Data Actual Variance Favourable or Unfavourable 700 units Sales in units Sales Direct materials cost Direct labour cost 700 $525,000 $210,000 $80,850 ($10.5 per hour x 11 hours) $155,000 $70,000 Fixed production cost Fixed administrative expense Net Profit $9,150 2. Based on your answer in required 1. above, briefly explain the possible causes of the variances. [10 marks] Page 9 of 10 Page 10 of 10