Question five Biasharabora (BB) Ltd manufactures one standard product and opcrates a system of variance accounting using a fixed budget. Data from the budget, the standard product cost for the month ended August 2018 are given below. Standard and budgeted data for August 2018 Standard cost for a unit of the product Material X 10 kgs @ K10 per kg Material Y 5 kgs @ K50 per kg Direct wages 5 hrs @K30 per hr Fixed production overhead is absorbed at 200% of direct wages Budgeted sales price has been calculated to give a profit of 20% of selling price Actual data for the month ending on 31/08/2018 Production 9,500 units sold at a price of 10% higher than that budgeted Direct materials consumed Material X 96,000 kgs@ K12 per kg Material Y 4,800 kgs @ K47 per kg Direct wages incurred were 46, 000 hrs @k32 per hr Fixed production overhead incurred K290, 000 Required (a) Calculate the sales and cost variances for BB Ltd for the month of August 2018 (18 marks) (b) Explain the significance of variances in the management of an organization such as BB Ltd (6% marks) (Total 25 marks)