Your investigations established the following: TP operates in a highly competitive market. This forces the company to offer discounts, especially fornew independent pizzerias trying to woo customers. There was also an increase in the price of direct materials, particularly with respect to ingredients dueto operational shutdown resulting from lockdowns. 5 High skilled labour was used to increase the quality of Tasty-P pizza and overtime increased to meetlast-minute 'rush' orders from customers.TP has recently purchased a new digitalised dough mixer which has changed the nature of productionprocess significantly. As a result, 2.5 of the 3 labour hours per batch now relate to the set up and monitoringof mixer. The production requires 5 hours of machine time. Siko is unhappy with the current standards andcomplains that:"Recently, no matter how hard we try, we can't seem to achieve the standards set. Somethingis wrong, but I'm not certain what it is".He further explains that operational set-up problems with the process have resulted in some poor-qualityproduction which were destroyed and thus the need for extra time and more machine hours than expected.Your report should include the following:a) Using the summary figures, an operating statement, in columnar format, that compares:(i) The original budget,(ii) A flexed budget,(iii) The actual results.

QUESTION TWO: TASTY PIZZERIA (TP) Tasty Pizzeria (TP) is one of Wellington's leading independent pizza makers. It's 15-inch cheese pizza Tasty-P) is TP's top seller made using high-quality ingredients. Due to its large size Tasty-P is patronised majorly by university clubs and groups who take advantage of the batch discount the company offers. Tasty- P is made in batch of 10-Box that is sold as a deal offer for $130 per batch (i.e., 10 boxes). TP prides itself as having a quality focused production process that is different from other traditional Fast-food pizza franchises. Recently, the Manager, Siko Chalmers noted that: "while other pizza franchises sell their mass- produced pies cheaper, TP believes in high-quality, homemade-type pies that sell at higher-but fair-prices and worth the health benefit" The budgeted and actual results for the month ended 30 September are as shown below: Budget Actual Batches sold 500 550 Sales 65,000.00 70,400.00 Production costs 50,500.00 62,380.00 Contribution margin 14,500.00 8,020.00 Fixed overhead (7,000.00) (6,500.00) Net profit 7,500.00 1,520.00 After reviewing the period's report, Siko is worried about the 80% reduction in profit from budget, despite a 50-batch increase in volume sold, and is seeking to investigate the situation. You have been invited to help and have obtained the following (unique data) regarding the key items used in production of Tasty-P 15-inch cheese pizza: Standard Cost for one Batch (10-Boxes) S per batch Materials: Ingredients 2 kg (tasty cheese + dough) at $15 per kg 30 Materials: Boxes 10 boxes at 50 cents each 5 Labour. 3 labour hours at $20/hr 60 Variable Overheads: $2 per labour hour 6 101 Actual Costs - Quarter ended 30 September S Materials: Ingredients 1,150 kg at $16 each 18,400 Materials: Boxes 5,600 boxes at 45 cents each 2,520 Labour 1,680 hours at $22 each 36,960 Variable Overheads: 4.500 62.380 Your investigations established the following: TP operates in a highly competitive market. This forces the company to offer discounts, especially for new independent pizzerias trying to woo customers. There was also an increase in the price of direct materials, particularly with respect to ingredients due to operational shutdown resulting from lockdowns