which costing method you would recommend to the CFO and (4 marks) What factors should the Crocoder when wepting conting method Question (20 marks) Budgets and variance analysis are comm Varance analysis rece and control activities n tim ol that companies use in planning the following selected data regarding the manufacture of a line of upholstered solas. Standards per Sofa Direct materials 3 square meters of input at $10 per square meter Direct manufacturing labour 0.75 hour of input at $20 per hour The following data were compiled regarding actual performance: Actual output units (sofas) produced: 20,000 Square meters of input purchased and used: 55,500 Price per square meter $10.20 Direct manufacturing labour costs $264,600 Actual hours of input 13,500 Labour price per hour $19.60 (4 marks) Required: (a) Jack Welch, the former CEO of General Electric, has called the budgeting process "the most ineffective process in management". However, budgets do present some advantages if they are administered well. Discuss four of these advantages. (8 marks) (b) Show computations of price and efficiency variances for direct materials and direct manufacturing labour. Indicate whether each of the variances is favourable or unfavourable. (4 marks) (c) Give plausible explanations of why each of the variances occurred. Support your explanations with examples where necessary. (d) Many companies compute variances on those items that are important to (4 marks) their businesses. Discuss the usefulness of variances and their benefits that avould bring to companies. ACT B313F (1700) Page 6 of 8