Exhibit 1: Profit and Loss Statement for the Year Ending 2021 Budget Actual (8000) (E000) Sales 16,872 17,061 Cost of Goods Sold 9.668 9.865 Gross Margin 7,204 7, 196 Less: Operating Expenses Marketing 1,856 1,440 R&D 1,480 932 Administration 1.340 4.676 1.674 4.046 Profit before Taxes 2,528 3.150Exhibit 2: Additional Information Electric Motors (EM) Electronic Instruments (EI) Selling prices per unit Average standard price E40.00 E180.00 Average actual prices, 2021 E30.00 E206.00 Variable product costs per unit Average standard manufacturing cost E20.00 E50.00 Average actual manufacturing cost E21.00 $54.00 Volume information Units produced and sold - actual 141,770 62, 172 Units produced and sold - planned 124,800 66,000 Total industry sales, 2021 - actual E44 million E76 million Total industry variable product costs, 2021 - actual E16 million E32 million Instrumental's share of the market (% of physical units) Planned 10% 15% Actual 16% 9% Planned Actual Firm-wide fixed expenses (8000) Fixed manufacturing expenses 3,872 3,530 Fixed marketing expenses 1,856 1.440 Fixed administrative expenses 1,340 1,674 Fixed R&D expenses (exclusively for EI) 1,480 932QUESTION - You are required to put yourself in Jennifer's position and state what you would do next in terms of analysis of the situation. - What options does Jennifer have? - Please show a detailed analysis. Instrumental Ltd This case requires the analysis of budgeted versus actual performance for direreat organisaiicnalfanciicns and considers strategic versus operational issues. David Jones, president and principal shareholder of Instrumental Ltd, sat at his desk reecting on the 2021 results (Exhibit 1). For the second year in succession the company had exceeded its prot target. David was obviously happy with the 2021 results. All the same, he wanted to get a better feel for the relative contributions of the R&D, manufacturing and marketing departments in this overall success. With this in mind, he called his assistant, Jennifer, a recent graduate of the London Business School, into his ofce. 'Jennifer,' he started, 'as you can see from om~ recent nancial results, we have exceeded our prot target by 622 000. Could you please prepare an analysis showing how much R&D, manufacturing and marketing contributed to this?' Jennifer, ushed with all the fervor and enthusiasm of a total convert to professional management, got down to work immediately. She collected all the data in Exhibit 2 and then wondered somewhat disconsolately what her next step should be. Instrumental's products can be grouped into two main lines of business: electric motors (EM) and electronic instruments (EI). Both EM and EI are industrial measuring instruments and perform almost identical functions. However, EM is based on mechanical and electrical technology, whereas E1 is based on the microchip. Instrumental Ltd uses a variable costing system for internal reporting purposes