Cinster Food limited is a UK frozen food producer and supplier to large supermarkets The standard costs of 1 kg of its frozen food is as follows Cost category Direct materials 2 kg 1 Direct labour 3 minutes 0 5 Fixed manufacturing overhead 0 9 Total manufacturing cost 2 4 The company sells its product for 4 per kg and annually sales 8,000 tons (8,000,000 kgs) every year It is estimated that the sales (quantity) is stable throughout the year and do not vary by months The company allocates its fixed manufacturing overhead based on the annual 400,000 direct labour hours (denominator hours) In the first quarter of 2020 (ending on 31 st March, 2020), the company reported the following actual costs and revenue Revenue and Costs (1 st quarter) Sales 2,001,000 kgs 8,504,250 Direct materials 3,901,950 kg 2,146,073 Direct labour 100,100 hours 975,975 Fixed manufacturing overhead 90,000 However, the company is widely affected by COVID 19 pandemic in the 2 nd quarter The companys performance in the 3 months ending on 30 th June 2020 are provided below Revenue and Costs (2 nd quarter) Sales 800,000 kgs 4,000,000 Direct materials 1,700,000 kgs 1,020,000 Direct labour 49,500 hours 519,750 Fixed manufacturing overhead 110,000 Requirements Prepare a report of the companys performance in the first two quarters In your report, you must compute the variances of two quarters separately and identify possible causes You can make reasonable assumptions in your report It is highly recommended that you research the impact of COVID 19 pandemic on the resource management using newspaper articles, UK government sources and any other reliable publication (28 marks)

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Cinster Food limited is a UK frozen food producer and supplier to large supermarkets. The standard costs of 1 kg of its frozen food is

Cinster Food limited is a UK frozen food producer and supplier to large supermarkets. The standard costs of 1 kg of its frozen food is as follows:

Cost category
Direct materials- 2 kg	1
Direct labour- 3 minutes	0.5
Fixed manufacturing overhead	0.9
Total manufacturing cost	2.4

The company sells its product for 4 per kg and annually sales 8,000 tons (8,000,000 kgs) every year. It is estimated that the sales (quantity) is stable throughout the year and do not vary by months. The company allocates its fixed manufacturing overhead based on the annual 400,000 direct labour hours (denominator hours).

In the first quarter of 2020 (ending on 31^st March, 2020), the company reported the following actual costs and revenue:

Revenue and Costs (1^st quarter)
Sales- 2,001,000 kgs	8,504,250
Direct materials- 3,901,950 kg	2,146,073
Direct labour- 100,100 hours	975,975
Fixed manufacturing overhead	90,000

However, the company is widely affected by COVID-19 pandemic in the 2^nd quarter. The companys performance in the 3 months ending on 30^th June 2020 are provided below:

Revenue and Costs (2^nd quarter)
Sales- 800,000 kgs	4,000,000
Direct materials- 1,700,000 kgs	1,020,000
Direct labour- 49,500 hours	519,750
Fixed manufacturing overhead	110,000

Requirements:

Prepare a report of the companys performance in the first two quarters. In your report, you must compute the variances of two quarters separately and identify possible causes.

You can make reasonable assumptions in your report. It is highly recommended that you research the impact of COVID-19 pandemic on the resource management using newspaper articles, UK government sources and any other reliable publication.

(28 marks)