SECTION A Answer TWO questions from this section and not more than one further question. (You are reminded that four questions in total are to be attempted with at least one from Section B.) 1. Secondline Ltd, a company which makes one type of product is aware of the uncertain nature of their market for the coming year. They plan to sell 50,000 units per month but have prepared meir market for the coming year. They plan to sell 50,000 units per modiont modity levels as follows: In fact, actual activity for the month of January has turned out to be tar worsc uman only 37,500 units were sold, with the following actual results: Required: (a) Use the estimates in the ogiginal budgets to calculate the fixed and variable elements of the costs (you should assume that the same linearity applies across the range of 20,000 to 70,000 units). Calculate all possible variances for each item of revenue and cost and reconcile the actual net profit with the budgeted profit for 50,000 units. Comment on the variances you have calculated. (20 marks) (b) You discover that during January there was a delay in receiving Material AB from the suppliers resulting in the loss of production of 8,000 units. This also meant that 3,500kg of material CD deteriorated and had to be thrown away. Adjust your variances to account for these known factors and show for each variance affected the amount which still needs to be explained