The company has always operated with a full standard costing system, providing full variance analysis of all variable costs and sales revenue. The standard cost of Radar1 1 unit is made up of the following costs: Direct materials Raw material A5 - 6 kg at $7 per kg $42.00 Raw material K9 - 3 kg at $4 per kg $12.00 Direct labour. - 4 hours at $10 per hour $40.00 Variable overheads - 4 hours at $16 per direct labour hour $64.00 The company's annual budget envisages sales of 20,000 units of the Radar1 product at $320.00 each, spread evenly over the year. For the financial year just completed, the company achieved the following results: Sales (18,500 units at $330 each) $6,105,000 Direct materials Raw material A5 - 111,000 kgs at $6.50 per kg $721,500 Raw material K9 - 57,000 kgs at $3.80 per kg $216,600 Direct labour. - 75,000 hours at $11 per hour $825,000 Variable overheads $1,200,000 The board of directors is reasonably satisfied with the operating performance but is surprised that there are considerable differences between budgeted and actual performance levels. Required: 1. Prepare a full variance analysis, reconciling actual performance with budget for the financial year just ended. Show all workings. 2. Identify possible explanations for each of the variances computed. The company has always operated with a full standard costing system, providing full variance analysis of all variable costs and sales revenue. The standard cost of Radar1 1 unit is made up of the following costs: Direct materials Raw material A5 - 6 kg at $7 per kg $42.00 Raw material K9 - 3 kg at $4 per kg $12.00 Direct labour. - 4 hours at $10 per hour $40.00 Variable overheads - 4 hours at $16 per direct labour hour $64.00 The company's annual budget envisages sales of 20,000 units of the Radar1 product at $320.00 each, spread evenly over the year. For the financial year just completed, the company achieved the following results: Sales (18,500 units at $330 each) $6,105,000 Direct materials Raw material A5 - 111,000 kgs at $6.50 per kg $721,500 Raw material K9 - 57,000 kgs at $3.80 per kg $216,600 Direct labour. - 75,000 hours at $11 per hour $825,000 Variable overheads $1,200,000 The board of directors is reasonably satisfied with the operating performance but is surprised that there are considerable differences between budgeted and actual performance levels. Required: 1. Prepare a full variance analysis, reconciling actual performance with budget for the financial year just ended. Show all workings. 2. Identify possible explanations for each of the variances computed