Paterson Ltd manufactures a laboratory product for the UK market. The following budget and actual operating profits have been provided by the company, for the production of 5000 units of the product in the first quarter of the year. Budget () Actual () Sales revenue 157,500 156,450 Less Raw materials (63,000) For 63,000 kg (61,800) For 60,750 kg Less Labour (31,500) 3,937.5 hrs (31,950) 3,900 hrs Less Fixed overheads (30,000) (29,100) operating profit 33,000 33,600 Required: Based on the above information a) Produce a variance statement of the following variances, clearly indicating whether they are adverse or favourable. (i) Labour rate variance; (ii) Labour efficiency variance; (iii) Material price variance; (iv) Material usage variance; (v) Fixed overhead variance; (vi) Sales price variance. (2 marks each = 12 marks) (b) Discuss the above variances, providing possible reasons for both the material and the labour variances. (8 marks)