A car engine manufacturer is trying to make an assessment of its operations for the past year. The entity operates a sta

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A car engine manufacturer is trying to make an assessment of itsoperations for the past year. The entity operates a standardmarginal costing system and manufactures a state-of-the-art enginefor which the following standard revenue and cost data per unit ofproduct is available: Selling price $60.00 Direct material A 2.5 kgat $8.50 per kg Direct material B 1.5 kg at $6.00 per kg Directlabour 0.45 hrs. at $30.00 per hour Actual data for thetwelve-month period was as follows: Sales and production 48,000units of the blaster were produced and sold for $2,904,000 Directmaterial A 121,900 kg were used at a cost of $1,005,675 Directmaterial B 67,200 kg were used at a cost of $420,000 Direct labourEmployees worked for 18,900 hours, but 19,200 hours were paid at acost of $585,600. Budgeted sales for the period were 50,000 unitsof Product Blaster. A recession last year meant that the market forthe product declined by 5%. Required: (a) Calculate the followingvariances. (i) Sales volume variance. (2 marks) (ii) Planning andoperational variances for sales volume. (4 marks) (iii) Price, mixand yield variances for each material. (10 marks) (b) Identify twostandards and explain the impact they each have on employeebehavior. (4 marks)