JK plc operates a chain of fast-food restaurants. The company uses a standard marginal costing system to monitor the costs incurred in its outlets. The standard cost of one of its most popular meals is as follows:

In one of its outlets, which has budgeted sales and production activity level of 50,000 such meals, the number of such meals that were produced and sold during April 2003 was 49,700. The actual cost data was as follows:

Required:

(a) Calculate

(i) The total budgeted contribution for April 2003;

(ii) The total actual contribution for April 2003.

(b) Present a statement that reconciles the budgeted and actual contribution for April 2003. Show all variances to the nearest £1 and in as much detail as possible.

(c) Explain why a marginal costing approach to variance analysis is more appropriate in environments such as that of JK plc, where there are a number of different items being produced and sold.