You are required to prepare the following:

1. A clear and detailed explanation of the benefits of using variance analysis to evaluate Killies Scuba Diving’s revenue and cost performance. Ensure you relate your answer specifically to Killies Scuba Diving.

1. Please provide the following calculation (with formulas stated clearly):

(a)       A table listing the standard prices, standard quantities and standard costs for all variable costs (direct and indirect).

(b)       A Flexible Budget for Killies Scuba Diving for the six months ended 30 June 2016.

(c)       Calculation of the following variances:

i)      Sales volume variance (assume volume is the total number of courses for the period);

ii)     Selling price variance;

(Note that the variances above have not been directly covered in lectures).

iii)    Price and quantity variances for each type of direct material;

iv)   Rate and efficiency variances for direct labour;

v)    Spending and efficiency variances for each variable overhead category;

vi)   Spending variance for each fixed overhead category;