Q:

the following budgeted figures have been taken from the cost records of MZ ltd:

production units	10 000	12 500
capacity level	80%	100%
sales	R1 144 000	R1 430 000
direct material @R5 per KG	R200 000	R250 000
direct labour @R20 per hour	R240 000	R300 000
factory overheads	R300 000	R330 000
selling and administrative expenses	R180 000	R190 000

normal capacity is equal to 12 500 units. As a result of poor economic conditions the budget for July 2019 has been set at 80%of normal capacity

the company uses the direct costing method for internal reporting purposes the following variance report for July 2019 has been presented to management

	fixed budget	actual budget	variance
production units	10 000	9000
sales units	10 000	9000
material usage (kg)	40 000	39 000
labour hours	12 000	11 500
sales	R1 144 000	R1 003 200	R140 800 (a)
material	R200 000	R188 000	R12 000 (f)
direct labour	R240 000	R224 000	R16 000 (f)
factory overhead	R300 000	R296 000	R4 000 (f)
selling and administrative expenses	R180 000	R176 000	R4 000 (f)
net profit	R224 000	R119 000	R104 800 (a)

(A) prepare an alternative variance report for the department that would be more meaningful to management

(B) critically discuss the format and content of the variance report for July 2019 a represented to the department