ASB 2507 Assignment Pingit plc produces components which it sells to the shipping industry. Mr.Hannah, the financial director, is always looking for ways to control the costs and improve performance. Pingit plc recorded the following actual results for Product Savynav for the last month: Product Savynav 2,100 units produced and sold for ?14.50 per unit Direct material L10 1,050 kg costing ?1,680 Direct material L17 1,470 kg costing ?2,793 Direct labour 525 hours costing ?3,675 Variable production overhead ?1,260 Fixed production overhead ?4,725 Standard selling price and cost data for one unit of Product Savynav is as follows. Standard selling price and cost data for one unit of Product Savynav is as follows. Selling price ?15.00 Direct material L10 0.6 kg at ?1.55 per kg Direct material L17 0.68 kg at ?1.75 per kg Direct labour 14 minutes at ?7.20 per direct labour hour Variable production overhead ?2.10 per direct labour hour Fixed production overhead ?9.00 per direct labour hour At the start of the last month, 2,130 units of Product Savynav were budgeted to be produced. No stocks of raw materials are held. All production of Product Savynav is sold immediately to a single customer under a just-in-time agreement. Required: Prepare a statement that reconciles budgeted profit with actual profit for Product Savynav for the last month. You should calculate variances in as much detail as allowed by the information provided. (40%) Suggest reasons why the variances may have occurred and explain any inter- relationship between them (25%) (c) Mr.Hannah has recently heard about Activity Based Costing (ABC) but is unsure what it is and whether Pingit plc could adopt this. You, as the new management accountant, have been asked to provide Mr.Hannah with information on ABC, so that he can make a decision whether to introduce it into the company. Your answer should include an explanation of ABC, what the method is intended to do, a comparison with the traditional method and whether it would affect your calculations in part (a). (You do not need to recalculate part (a)). (35%) The assignment date is 3pm Wednesday 16th March 2016. The assignment should be submitted both as a hard copy and also via turnitin.