Greenacre Manufacturing Co. is a division of a large pharmaceutical company that has a remarkably successful track record in new product development. This division is based in a midland town in Ireland and has recently brought to the market a travel sickness capsule that cures travel sickness instantly and does not require taking in advance of travelling. The capsules are sold in packets. The company operates a standard absorption costing system. The results for April 2021 have proved extremely disappointing and the Managing Director (MD), has called for a report reconciling the actual loss with the projected profit and giving some indication of the principal variances. Greenacre Manufacturing Co. Results for April 2021 Budget Actual '000 000 Sales - budgeted lm packets at 3.20 per packet 3,200 Sales - actual 0.75m packets at 3.36 per packet 2,520 1,600 Direct materials - budgeted Direct materials - actual 8,000 kilograms @ 200 per kilogram 7,500 kilograms @ 220 per kilogram 1,650 432 Direct labour - budgeted Direct labour - actual 24,000 hours @ 18 per hour 20,000 hours @ 17.20 per hour 344 Variable production overhead budgeted actual 24,000 hours @ 14 per hour 336 270 24,000 hours @ 20 per hour 480 Fixed production overhead budgeted actual TOTAL COSTS Profit/(Loss) 475 2,848 352 2739 (219) Requirement: (a) Calculate the standard profit margin per unit (4 marks) (6) Prepare an operating statement for April 2021 reconciling budgeted profit with the actual loss for presentation to the MD. (Note: Detailed variances are required and all workings must be shown. Round to three decimal places where necessary). (17 marks) (c) After presenting the variances calculated to prepare the operating statement in (a) above at a management meeting one of the management team expresses the view that while he understands the reasons for the material and labour and sales variances he is confused about the fixed and variable overhead varainces.' Interpret and explain the reasons for the variable and fixed overhead variances that you have calculated for the benefit of the management team. (4 marks) TOTAL 25 MARKS