PLEASE ANSWER THIS COST ACCOUNTING QUESTION IN DETAIL WITH STEP WISE EXPLANATION. REFER TO THE QUESTION IN THE IMAGE. THANKS IN ADVANCE, I'LL GIVE THUMBS UP$.$ PLEASE ANSWER AS SOON AS POSSIBLE AS I HAVE A VERY IMPORTANT EXAM TOMORROW.

Zenith Electronic

CEO. $4$

Pawan Gupta, Administrator of Zenith Electronic, was greatly concerned that the results of the year's operations were considerably worse than budgeted. One reason for this problem was that competition had forced the company to lower its price for one of its most significant jobs, but there appeared to be some other reasons as well. Mr$.$ Gupta decided to analyze these reasons in preparation for his upcoming meeting with Zenith Electronics' supervisors.

BACKGROUND:

Zenith Electronic had been formed over five years ago. Initially, its only line of business was AC servicing. Later on$,$ Mr$.$ Gupta expanded its service lines. Currently, the company offers three services $($or "jobs," as they frequently were called$)$: AC Servicing, Refrigerator servicing, and Washing Machine Servicing.

A distinctive feature of the Zenith Electronic was its use of mechanic assistants. Since much of the work traditionally done by mechanics did not require the skill of a trained mechanic, Mr$.$ Gupta realized that he could offer lower prices to his customers by having mechanics only perform those tasks that required their specialized skills. The remaining tasks were done by lower$-$skilled, and hence lower wage, mechanic assistants.

FINANCLAL INFORMATION:

Exhibit I contains the budgeted number of jobs, by type, the budgeted price per job, and the budgeted variable expenses per job, classified into three "inputs $($variable costs$)$:$"$ mechanics, mechanic assistants, and supplies. It also shows the total revenue and variable expenses for each job type, and contribution of each job type.

Mr$.$ Gupta asked his staff assistant, Anu Sharma, to use the actual data for the period, shown in Exhibit $2,$ as the basis for preparing a variance analysis report on results for the year. Her report was to contain a complete breakdown of the reasons why Zenith Electronics' actual profit diverged from the budget. The report would be used by Mr$.$ Gupta for his meeting with the supervisors.

Page $4$ of $7$

Required:

$6+24=30$ Marks

A$.$ Prepare a flexible expense budget for the year as per the format of 'Original Budget' of Exhibit $1$: Original Budget given in the case.

B$.$ Compute the following variances and create a summary table of Variances as per the format given below in your answer book. $($Actual Results are provided in Exhibit $2.$

$\backslash$table$[[$Variances$,\backslash$table$[[$AC$],[$Servicing$]],\backslash$table$[[$Refrigerator$],[$servicing$]],\backslash$table$[[$Washing$],[$Machine$],[$Servicing$]]],[[$A$]$ Revenue Variances,,,$],[$Jobs Volume,$-44,100,-4000,-4200],[$Revenue Price,$0,-7200,3200],[\backslash$table$[[$Variable Cost$],[$Variances$]],,,],[$Mechanics$,,,],[$Productivity$/$Efficiency$,0,-360,-480],[$Wage Rate,$-1840,-1800,400],[$Mechanic Assistants,$-1840,-1080,-400],[$Productivity$/$Efficiency$,-2300,-7200,-3200],[$Wage Rate,$14720,0,-14,400$