ABS Ltd operates a standard marginal cost accounting system. Information relating to product X, which is made in one of the company departments, is given below: Standard marginal Product cost Product Unit () Direct material 6 kilograms at 4 per kg Direct labour 1 hour at 12 per hour Variable production overhead * * Variable production overhead varies with units produced Budgeted fixed production overhead, per month: 106,000. Budgeted production for product X: 20 000 units per month. Actual production and costs for month 6 were as follows: Units of X produced 18 550 Direct materials purchased and used: 113 500kg 442 650 Direct labour: 17 800 hours 223 000 Variable production overhead incurred 58 000 Fixed production overhead incurred 102 000 825 650 You are required to: a) Prepare a columnar statement showing, by element of cost the: original budget; (ii) flexed budget; (iii) actual; (iv) total variances; 15 marks. b) (ii) Subdivide the variances for direct materials and direct labour shown in your answer to a) (i)to(iv) above to be more informative for managerial purposes. 15 marks. c) Critically identify the possible causes of the labour and material variances calculated in the above 20 marks. Total 50 marks