Zits Ltd makes two models for rotary lawn mowers, the Quicut and the Powacut. The company has a sales director and reporting to her, two product managers, each responsible for the profitability of one of the two models. The company's financial year ended on 31 March. The budgeted and actual results for the two models for the year ended on 31 March are given below:

The accountant had drawn up a series of flexed budgets at the beginning of the year should the actual volume differ from budget. The variable costs were unchanged, but the budgeted fixed costs, assuming a constant sales mix, for the different output ranges were as given below:

The sales director has just received information from the trade association that industry rotary lawn mower sales for the twelve months ended on 31 March were 1.3 million units as against a forecast of 1.0 million.
(a) Prepare a schedule of variances which will be helpful to the sales director, and a schedule of more detailed variances which will be appropriate to the two product managers who are treated
as profit centres.
b) Discuss the results scheduled in (a) above identifying which of the variances are planning and which are operating variances.

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Quicut Powacut Total Buget Actu Buget Budget Actual 240 (E000) (E000) (£000) (000) (E000) (E000) 280 120 110 360 390 Sales units (000 units) Sales revenue Costs: 28800 32 200 24000 24 200 52800 56 400 Variable Traceable fixed 9600 11 480 7200 6820 16800 18 300 manufacturing 8200 7600 6800 6800 15000 14 400 Period costs Manufacturing Administration 5700 6000 and selling 4300 4 41800 43 200 £11000 £13 200 Net profit before tax Output range (000 units) 300-360 (£000) 361-420 (£000) Traceable fixed 16000 6000 4500 £26000 manufacturing costs 15000 5700 4300 £25000 Period cost- manufacturing administration and selling