Question 7 Full Stop Ltd manufactures a key component used in electric car braking systems. There are several large competitors in the industry but the growing market has allowed Full Stop to generate su'icient sales to be protable on an annual basis, although demand can uctuate signicantly from month to month. The nature of the product means that quality is vital. Any drop in quality would almost certainly lead to customers looking for a new supplier, although switching to a new supplier would take several months to arrange. The company has a standard costing system in place and the standard cost card currently in use is shown below: funit Selling price 25.00 Direct materials {0.5kg x l2r'kg) (600} Direct labour (0.2 hours it 20mour) (4.00} Variable overhead (0.2 hours x 8010ur) (1.60} Fixed overhead (4.50: Standard prot 3.90 Budgeted production and sales are 240,000 units per year, split evenly throughout the year, giving a budgeted monthly absorption costing prot of 1 78,000. The nature of Full Stop's production process means that production and sales volumes are always identical. The actual results for December and the variances for the month that the Management Accountant has calculated so far are shown below: Actual results for December 526,?50 130,075 81 .270 32,895 94,250 Selected variances for December 13,350 (F) 10, 'i'SO (A) Direct material price 1 1,825 (F) on Fixed overhead expenditure 4,250 {A} Fixed overhead volume 6350 (F) In a meeting to discuss the performance for December, the following comments were made: Sales revenue Direct materials (11,825 kg Direct labour (3,870 hours) Variable overhead Fixed overhead Sales volume Sales price The sales manager stated \"I think the results Show that we were able to grow sales through the hard work ofoar sales people who are explaining the product is superior quality to our customers\" The production manager explained that \"the adverse material usage variance is simply due to the increased sales volume\" and \"the favourable xed overhead volume variance shows that we are controiiing our fixed costs weil\" The operations manager concluded \"we can say that our overait performance is better than expected given that profit is higher than budgeted\" Required a) Calculate the direct labour variances and variable overhead variances for December (10 marks) b) Explain to what extent each of the statements made in the meeting to discuss December 's performance is correct. (Maximum 375 words) (15 marks) The production manager is also reviewing the performance of her three maintenance technicians in December. Their role is to provide both preventative maintenance and repairs for the machinery in Full Stop's manufacturing facility. The performance of the technicians has not previously been measured using formal performance measures, but a number measures that could be used have been suggested and these are shown below. Poesible performance measures Technician Technician Technician December results A B C Number of machines serviced 0 25 20 Repairs performed 23 25 35 Average response time to repair requests 2 hours 1.5 hours 1 hour Average time to complete repair 2.5 hours 3 hours 2 hours % successful repair-s\" 98% 99% 92% *A repair is considered successful if the machine involved does not requires further repair within 48 hours. c) Discuss whether it possible to assess which technician had the best performance in December. Your answer should consider single, multiple, and composite measures. (Maximum 250 words) (10 marks)