The board of Whiz tech was reviewing a summary of its first year results Volumes Sales Cost Profit Budgeted K12,000 U K144,000 K93,000 17% (3%) 17% Actual 14,000U K140,000 K109,185 On examining the figures above the chief executive said. I don't understand it. Sales volumes are up 17%, whilst sales revenues are down 3%, which is within the estimated error. Taking cost increases of 17% along with a fall in revenues of 3%, should only mean a fall in profits of 20% and not 40%. There must be something wrong with the accounts." You are the newly appointed CPA company accountant replacing the outgoing accountant who has retired and gone to live in Bermuda "Well can you explain this to us- the chief executive said tuming to you. You enquire if the retiring accountant left any other files. The chief executive hands you a file, whilst proposing to adjoum the meeting and reconvene the following Friday. At that meeting you will be expected to offer some explanations as to the change in profit. # The information contained in the file was as follows; Actual Budget Sales Volumes 14,000 u 12,000 u Selling price unit K10.00 K12.00 Production volumes 14,000 u 12,000 u Total Direct materials 7,700 kes 6,000 Kgs price per kilogram K5.80 K6.00 Total labour hours 9,450 hours 9,000 hours Rate per hour K4.50 per hour K4.00 per hour Fixed Production overhead K22,000 K21,000 Market size 45,000 u 36,000 u You are required to produce the following: (a) 1) Sales price. [1 mark] (1) Sales volume variance in terms of standard contribution [2 marks] (i) Material price and usage variance. (5 marks] iv) Labour efficiency and rate variance. [5 marks] 6) Analyse the sales volume variance between: (1) Market share. [2 marks] ) Market size. [2 marks] c) Reconcile the budgeted profit with actual net profit and comment thereon [8 marks] Total [25 marks)