Materials and manufacturing labour variances, standard costs. Consider the following selected data regarding the manufacture of a line of upholstered chairs:

Standards per Chair Direct materials 2 square metres ofinput at $12 per square metre Direct manufacturing labour 0.5 hour ofinput at $24 per hour The following data were compiled regarding actual performance: actual output units

(chairs) produced, 20,000; square metres of input purchased and used, 37,000; price per square metre, $12.24; direct manufacturing labour costs, $211,680; actual hours of input, 9,000; labour price per hour, $23.52.

Required 1. $how your computations on the price and efficiency variances for direct materials and for direct manufacturing labour. Give a plausible explanation ofwhy the variances occurred.

2. Suppose 60,000 square metres of materials were purchased (at $12.24 per square metre)

even though only 37,000 square metres were used. Suppose further that variances are identified with their most likely control point; accordingly, direct materials price variances are isolated and traced to the purchasing department rather than to the production department. Compute the price and efficiency variances under this approach.