A famous toy product, Zero, is produced by Pirelli Ltd. The following information is extracted from its production budget of April 2021:-

No. of unit produced: Direct material cost: Direct labour cost:

10,000 units 5,000 kg@$9 per kg 2,500 hours@$40 per hour

The actual results for the month of April 2021 are as follows:-

No. of unit produced: Direct material purchased: Direct material used: Direct labour cost:

Required:

8,000 units 4,000 kg costing $38,000 3,200 kg 2,000 hours costing $84,000

1. a) Calculate material price variance, material usage variance and total material variance.

2. b) Calculate the wage rate variance, labour efficiency variance and total labour variance.

3. c) Describe the possible causes of material price variance calculated in (a).

4. d) Describe the possible causes of wage rate variance calculated in (b).

(9 marks) (8 marks)

(4 marks)

(4 marks)