Hope Limited makes and sells kiteboards for which the standard cost is as follows:

Direct materials	5kg at 17 per kg	85
Direct labour	11 hours at 12 per hour	132
Fixed production overhead	5 hours at 20.00 per hour	100
Standard production cost		317
Standard profit margin		178
Standard selling price		495

Fixed production overhead of 1,500,000 is absorbed into production on the basis of direct labour hours with a budgeted volume for the period of 15,000 units.

For the period under consideration, the actual production and sales were 14,000 units with the following results:

Direct materials used	77,000 kg	825,000
Direct labour cost incurred	168,000 hours	1,932,000
Fixed production overhead incurred		1,550,000

The actual selling price in the period was 515 per unit.

1. Produce a reconciliation statement from the original budgeted profit to the actual profit. The reconciliation should show variances for material price and usage, labour rate and efficiency, fixed overhead expenditure and volume and sales price and sales margin volume clearly indicating whether the variances are favourable or adverse
2. Comment briefly on the possible interdependencies between the variances, use examples from the above to support your argument.