Twixt plc manufactures a single product. Budgeted production and sales are 15,000 units for October 2021. It is expected that 13,000 kg of raw material will be required at a cost of 5.00 per kg. Production workers are expected to be paid 12.00 an hour and 3,500 production labour hours are expected to be required. Fixed overheads are expected to be 30,000. The sales price is expected to be 20 per unit. The actual results were: Sales number of units 15,500 Sales revenue 294,500 Materials 63,000 Labour 44,000 Fixed production overheads 29,000. Required: Prepare a fixed, flexed and actual budget for October 2021, identify all the variances and briefly comment on the variances. Part B (16 marks) i. ii. iii. Trite plc manufactures wine bottle corks. The variance analysis shown below has been produced for the production department for the last accounting period. Material price variance material usage variance labour rate variance labour efficiency variance variable overhead variance fixed overhead expenditure variance F = favourable variance, A = adverse variance 1,600 F 2,000 A 2,300 A 2,500 A 1,300 F 1,200 A In response to the variance analysis the production manager has made the following comments We had problems with strikes and then a high staff turnover, so I increased wage rates during the period. I believe that this has improved staff morale and produced a positive benefit to the company. We have been directed to a cheaper supplier which should increase profit. We have previously rented an extra machine when needed but because output has been high this year we decided to buy a new machine at the start of the year. We have not needed to rent the extra machine this year. Required Comment on the performance of the production department based upon the variance analysis and the comments from the production manager provided. Part C (14 marks) A division with total assets of 250,000 currently earns a ROI of 14%. It can make an additional investment of 30,000 for a 5 year life with nil residual value. The average operating income per annum from this investment would be 3,600. The division's cost of capital is 10%. Required a. Compute and comment on the Return on Investment and the Residual Income, with and without the additional investment, and then advise the company whether it should make the additional investment. (8 marks) b. Critique the relative advantages of ROI and RI for measuring divisional performance. (12 marks)