Question 1 Naglaa Ltd is a medium-sized company producing thick wool blankets. Budgeted and actual information about the best-selling blanket,'MEEDCO' is shown below. Since budget preparation four months ago, the company discovered serious problems in sales and operating costs. The budgeted performance over the last four months Expected units 6.000 blankets Material Usage 15kg of wool Price 30 per kg Labour Hours 6 hours per blanket Rate 22.5 per hour Total Overheads Variable 96,000 (Absorbed by Direct Labour Hours] Fixed 60,000 Selling price 500 per blanket The actual performance over the last four months revealed the following: a. Naglaa Ltd produced and sold 4,500 blankets. b. Sales revenue was 2,625,000. C. 54,000kgs of wool were bought and used at a cost of 1,296,000. d. Total direct labour cost was 755,628 for 31,000 hours. This includes 1500 idle hours, caused by machine's breakdown. e. Total variable overhead was 104,625 and total fixed overhead was 67,500. Required: a) Produce a statement reconciling the flexed budgeted profit/loss to the actual profit/loss for the last four months. (30 marks) b) Calculate with supporting formulas the appropriate operating variances. (30 marks) c) From your point of view, identify a reasonable cause for each variance. (10 marks)