The coffee bar in The Red Lion Hotel has always proved popular but has never made the expected level of profit. Complete the following variance analysis to identify and quantify the various causes of this profit shortfall. The Red Lion Hotel knows how much a cup of coffee should cost to make (i.e. the 'standard cost') based on the following assumptions:- Arabica Coffee beans being purchased at 3.50 per Kg 1 kg of coffee beans making 40 cups of coffee A coffee barista being able to make 10 coffees per hour, and being paid 7.50 per hour Each cup of coffee incurring variable overheads of 0.04 (paper napkin, milk & sugar) The hotel has a standard selling price of 2.00 for a cup of coffee (a) Using the above information complete the following cost card (including all units) to show the standard cost of one single cup of coffee and the profit contribution that should result. (3 marks) Cost card for a single cup of coffee Item Unit Cost Quantity Per Cup Direct Materials Direct Labour Variable Overheads Total Cost per cup Selling Price per cup Profit contribution per cup In the month of June, the hotel is budgeted to sell 5,000 cups of coffee at a standard selling price of 2.00 each. (b) Complete the "Original Budget" column in the following table to calculate the budget profit contribution that sales of coffee should make in June. Brief workings should be included in the table where appropriate. (4 marks) Red Lion Hotel - Total coffee sales for the month of June Original Budget Flexed Budget Actual Results Variances Sales Revenue Sales Price Variance Direct Materials Direct Materials Total Variance Direct Labour Direct Labour Total Variance Variable Overhead Total Overhead Variance Profit Contribution Net Profit Variance At the end of June it is established that the actual sales figures and actual costs relating to that months trading in the coffee bar were:- Sales of 6,200 coffees which generated 11,780 of sales revenue 255 Kg of Arabica coffee beans being used at a total cost of 969 830 staff hours at a total cost of 6,474 350 being incurred on milk, sugar and paper napkins in the month. (c) In the previous table:- Complete the Flexed Budget column based on June's actual sales volume of coffees Complete the Actual Results column and hence calculate the five named variances in the final column of the table.