QUESTION 3 (15 marks) Hakim Enterprise is a sole proprietorship business located in Mersing, Johor. The company manufactures and sells high-quality metal sunglass frames to optical shops in the Johor area. The company operates a standard absorption costing system and is currently analysing its flexible budgets against actual figures for the year ending 311 December 2021. The following is the flexible budget and actual data for Hakim Enterprise, prepared by the accounts executive for the year ended 31 December 2021. Actual results Flexible budget Sales (in units) 3,200 3,200 Revenue (RM) 297,600 304,000 Variable costs (RM): Direct materials 67,500 62,400 Direct labour: Skilled labour 75,000 76,800 Unskilled labour 66,000 64,000 Fixed costs (RM) 29,800 29,800 Operating income (RM) 59,300 71,000 Standard quantities, standard prices, and standard unit costs follow for direct materials and direct labours as below: Direct materials Standard Quantity Standard Price 1.5 kilograms Standard Unit Cost RM13 per kilogram RM12 per hour RM5 per hour Direct labour - Skilled Direct labour - Unskilled 2 hours 4 hours RM19.50 RM24 RM20 The actual cost of direct materials used was based on 5,000 kilograms. Meanwhile, actual direct labour costs for skilled and unskilled labour were based on total hours used of 6,000 and 12,000 respectively. Required As a business owner who has good knowledge and understanding of budgeting, what action would you take to improve the performance between the budget and the actual results? How would you react to the variances that are the outcome of the analysis? (Hint: Show the relevant calculation, comment on the results, and suggest solutions to improve the company's performance.)