Advanced Sports Equipment Ltd. manufactures treadmills and elliptical trainers. Recently, the business has experienced several machinery breakdowns, which have caused significant production delays. Therefore, management has installed a new production facility for the purpose of reducing the frequency of breakdowns, and to enhance production efficiency.

Management expects the new facility to reduce the labour time by a substantial amount. Management also expects the new facility to reduce the amount of direct material waste. While the new facility requires a highly skilled labour force, it is expected to increase the production volume to meet the increasing market demand for quality sports equipment in recent times.

A cost variance report has been prepared for the month of June. This report is the first full month report after the new facility was installed.

Advanced Sports Equipment Ltd's June Cost Variance Report

Direct material:

Direct material price variance 15 U

Direct material quantity variance 3 500 F

Direct labour:

Direct labour rate variance 15 900 U

Direct labour efficiency variance 20 000 F

Manufacturing overhead:

Variable overhead spending variance 9 000 U

Variable overhead efficiency variance 11 000 F

Fixed overhead budget variance 30 000 U

Fixed overhead volume variance 35 000 F

The company budgets and applies manufacturing overhead on the basis of direct labour hours.

Required:

Explain how the variances in the above report are likely to have been influenced by the installation of the new facility. Provide a brief explanation of how each variance may have been affected (word limit: max 40 lines).