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.[11 marks] 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 '000 1,750 Sales revenue Variable costs: Materials Labour Distribution Total Variable Costs Contribution 900 120 60 1080 720 850 120 60 1030 720 Fixed Costs: Quality control Rent Administration Total Fixed Costs 15 30 10 25 35 30 75 70 Operating Profit 645 650