R company produces eco-friendly clothes hangers made from recycled cardboard. The company has developed a new process to manufacture the clothes hangers with minimal company has developed a new process to manufacturing process was filmed by the environmental impact. In November 2019, the manufacturing process was filmed by the company's marketing staff and uploaded to social media sites, This resulted in a substantial increases in sales in 2020.

Budgeted and actual information for the month of March is presented below

Budgeted information

Production and Sales in units 67,200

Selling price per hanger £1.55

Direct Material recycled cardboard 5,040 kgs £4,032

Variable production overhead (based on direct labour hours) £4,032

Fixed production overhead (based o direct labour hours) £10,752

Direct labour 3,3600 hours £40,992

Actual information

Production and sales in units 84,000

Selling price per hanger £1.45

Direct Materials: recycled cardboard 6,720 kgs £5,460

Variable production overhead £4,536

Fixed production overhead £12,663

Direct labour 3,780 hours £56,511

Requirement

a) Prepare a profit statement showing original budget, flexed budget ad actual results.

b) Calculate relevant variances in as much details as the information above permits

c) Briefly explain how variances can be inter-related providing an example that supports your answer