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This is the background information, I will send a photo of the question 'Nicola owns and operates a' small business selling homewares. She established the

This is the background information, I will send a photo of the question

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'Nicola owns and operates a' small business selling homewares. She established the business around 12 years ago, and has seen a big increase in demand in recent years. Nicola is concerned that operating the business on her own is becoming too much for her, and is considering downsizing. Her accountant advised her to analyse business performance based on the items she sells, as it may provide insights into the direction she could move. Selected accounting information for the divisions, and the business as a whole, are provided below. These relate to the year ended'30 June 2022. ' : Wall art Linen Indoor plants Totals 1 , E imjome 110,500 38,300 95,600 244,400 ' i Divisional Costs (45,900) (19,300) (54,400) (120,100) g Divisional 64,600 18,500 41 ,200 124,300 i ontribution E Eommon Costs ' (10,000) (25,000) (60,000) i ma. Prot l 54,600 (6,500) 64,300 Nicola undertook a comparison of actual results compared to budget which revealed many variances, including the following: Accounting item Nature of variance Sales income Favourable Utilities expense Favourable Cost of sales expense Unfavourable Discuss the nature of the accounting items above and suggest why the variances may have occurred. (6 marks)

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