ABC Barns Company produces small steel barns. The company sells its product at $3,000 per unit and normally produces 5,000 units annually.

ABC Barns uses standard costing system to account for production cost variances. At the beginning of 2021, standard costs per one barn were estimated as follows:

• Direct material cost (6 metal sheets * $200) $1,200
• Direct labour cost (10 hours * $20) $200
• Overhead ($500 per unit, including $100 of variable overhead cost) $500
• Total $1,900

During 2021, the company received an order (1,000 units) from ABC Company. As a result, 5,000 of units produced were sold at its normal regular price of $3,000 per unit and 1,000 of units produced were sold to ABC Company at $2,800 per unit.

To produce the 6,000 units, the company incurred the following costs:

• Materials purchased and used (36,200 metal sheets * $200) $7,240,000
• Direct labour cost (62,000 hours * $21) 1,302,000
• Variable overhead $600,000
• Fixed overhead $3,000,000

Required:

1. Calculate the production cost variances (material price variance, material quantity variance, labour rate variance, and labour efficiency variance) and indicate whether they were favorable or unfavorable (each variance). (6 marks)
2. Calculate the financial impact of the 1,000-unit special order from ABC company on the overall performance of StoreMe. (4 marks)