Grove Hill Electric Ltd. manufactures electrical products and has a number of manufacturing divisions throughout the UK. There are several different departments in the company including design, production, distribution and marketing. The budget for the year to 31st of December 2022 was set centrally and communicated to each of the managers who have responsibility for achieving their respective targets. The following report has been produced for the production department for the South West Division for the month of June 2022: Budget Actual Variance Volume (units) 14,000 17,920 3,920 (F) Direct materials 147,000 184,800 37,800 (A) Other materials 6,580 8,120 1,540 (A) Direct labour 189,000 203,000 14,000 (A) Production overheads 134,400 147.840 13,440 (A) Head office recharges 36,400 44.800 8,400 (A) Total 513,380 588,560 75,180 (A) Direct materials and other materials are variable costs. Direct labour includes fixed salary costs of 154,000 the balance is variable. The production overhead includes a variable cost that is constant at all volume levels, and a stepped fixed cost which changes when the volume level exceeds 15,400 units. A further analysis of the production overheads is shown below: Volume (units) 11,200 14,000 16,800 Costs () 127,680 134,400 162,120 Required a. Compute budgeted rates for Direct materials (3 marks) Other materials (3 marks) Variable direct labor cost (3 marks) b. Using high-low method compute variable production overheads rate and fixed production overheads at actual volume of production (12 marks) c. Prepare flexed budget for the actual level of production (8 marks) d. Calculate variances between actual costs and flexed budget costs, state whether the variances are favorable (F) or adverse (A) (6 marks) e. Briefly comment on the benefits of flexed budget (5 marks) Total 40 marks