The Ajanta Manufacturing Company's job-costing system has two direct cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor hours (DLH). At the beginning of 2015, Ajanta adopted the following standards for its manufacturing costs: Input 3 kgs at Rs. 5 per kg 5 hrs at Rs. 15 per hr Cost per output unit Rs. 15 Rs. 75 Direct materials Direct manufacturing labor Manufacturing Overhead: Variable Rs. 6 per DLH Rs. 8 per DLH Rs. 30 Fixed Rs. 40 Total manufacturing cost Rs. 160 The average denominator level for total manufacturing overhead per month in 2014 is 40,000 direct manufacturing labor hours. Ajanta's budget for January 2015 was based on this denominator level. The actual records for January 2015 indicated the following: Direct materials purchased Direct materials used kgs at Rs. 5.2/kg Kgs hrs. at Rs. 14.6/hr 25000 23100 Direct manufacturing labor Total actual manufacturing overhead (variable and fixed) Actual production 40,100 Rs. 6,00,000 7800 output units Required: a. Prepare the flexible budget for January 2015. b. For the month of January 2015, compute the following variances, indicating whether each is favorable (F) or unfavorable (U). Also mention probable reasons for each of the variances. 1. Direct material price variance ii. Direct material usage variance iii. Direct manufacturing labor rate variance iv. Direct manufacturing labor efficiency variance v. Total manufacturing overhead spending variance vi. Variable manufacturing overhead efficiency variance vii. Production volume variance c. Is there any interlink between the variances calculated in b) above? Comment briefly.