Question 7 35 pts Full Stop Ltd manufactures a key component used in electric car braking systems. There are several large competitors in the industry but the growing market has allowed Full Stop to generate sufficient sales to be profitable on an annual basis, although demand can fluctuate significantly from month to month. The nature of the product means that quality is vital. Any drop in quality would almost certainly lead to customers looking for a new supplier, although switching to a new supplier would take several months to arrange. The company has a standard costing system in place and the standard cost card currently in use is shown below: /unit Selling price Direct materials (0.5kg x 12/kg) 25.00 (6.00) Direct labour (0.2 hours x 20/hour) (4.00) Variable overhead (0.2 hours x 8/hour) (1.60) Fixed overhead (4.50) Standard profit 8.90 Budgeted production and sales are 240,000 units per year, split evenly throughout the year, giving a budgeted monthly absorption costing profit of 178,000. The nature of Full Stop's production process means that production and sales volumes are always identical. The actual results for December and the variances for the month that the Management Accountant has calculated so far are shown below: