Task 3: learning outcome 3 The table below presents the expected production budget and the actual production volume for one of the office clients during last quarter. This client is facing problems with evaluation the performance of his business and in control budget. You have been asked to help and advice this client in this regard. Instructions: 1) Analyse actual, what does it mean? How is actual cost determined? How does this differ to estimated or standard costs? 2) Analyse standard cost, what does it mean? How is standard cost determined? How does estimating standard costs result in variances? 3) Create a flexed budget (standard cost) and apply the variance analysis techniques. 4) Explain and analyse the concept of variance analysis, and why it is important in order to evaluate a business performance and control budgets. 5) Suggest possible course of actions to correct variances. 6) Evaluate the advantages and disadvantages of different types of variances. Original budget 3.000 unite Actual figures 3.500 units Output It JE Sales revenue 150.000 130.000 Raw material 45,000 (45.000 12.000 (40,000 meter Labour 127.000 15.000 hours) I.000 (4.500) Fixed overhead.000 56,000 Operating profi23.000 24,000 Actual Cost :is Standard Costis Define the Variance Analysis & Flexible Budget Variance Analysis: Flexible Budget: Flexible Budget: Preparing Flexible Budget Item Actual Figures Flexible Budget Original Revenues W d.1 Fixed overhead Profit Variance Definition Calculation Sales Flume Variance Sales Price Briance Material Usage Prince Material Price Variance Labur Efficiency Variance Laher Rate Variance Fixed Spending Variance Budget Reconciliation: Sales Volume Variance Advantages Disadvantages Interpretation Sales Price Variance Advantages Disadvantages Interpretation Labor Efficiency Variance Advantages Disadvantages Interpretation Labor Rate Variance Advantages Disadvantages Interpretation Fixed Spending Variance Mulvontapes Disadvantages Interpretation