Choc Ltd manufactures and sells calculators. The information relating to their budget and actual performance for September are shown below:

a. Calculate all appropriate variances for the month of September based on the actual units produced.

b. Discuss the possible reasons for each variance calculated and how the adverse variances can be avoided.

Production in units ('000) Budget 150 '000 1,800 Actual 145 f'000 1,750 Sales revenue 900 120 Variable costs: Materials Labour Distribution Total Variable Costs Contribution 60 1080 720 850 120 60 1030 720 10 Fixed Costs: Quality control Rent Administration Total Fixed Costs 25 15 30 30 75 35 70 Operating Profit 645 650