At the end of June the manager of the B.C. manufacturing plant was provided with the following variance analysis report. Favourable/ Unfavourable Production in units Production costs: Actual 344,475 Budget 338,000 Variance 6,475 Direct material S557,700 571,484 $ (13,784) 1,572,185 U Direct labour Variable overhead U 1,521,000 (51,185) costs (5,738) 2,583 S(68,124) U 126,750 195,195 $2,400,645 $2,468,769 132,488 192,612 Fixed overhead costs Total production costs U The manager immediately called the production supervisor, demanding an explanation for the large unfavourable variance for the quarter. The production supervisor was puzzled. He thought the cost- cutting measures they had incorporated were beginning to work. He certainly wasn't expecting such a large discrepancy. The budget that was used to establish the standard rates as follows: Cost $1.50 per kg $18.00 per hour Volume 1.10 kg per unit 0.25 hour per unit Direct material Direct labour Predetermined overhead rate: $1.50 per hour $2.31 per hour 1.00 direct labour hour 1.00 direct labour hour Variable Fixed Other relevant information: 1. A total of 375,000 kg of direct materials was purchased during the quarter at a cost of $1.58 per kilogram. 2. A total of 361,699 kg of direct materials was used in production to manufacture 344,475 units. 3. Payroll recorded 88,325 direct labour hours at an average cost of $17.80 per hour. Instructions Do you agree with the plant manager that the production supervisor performed poorly, as might indicated by the large unfavourable variance? Explain fully. Include in your response calculatic all production variances for direct materials, direct labour, variable overhead, and fixed overhe- QUESTION I, 16 MARKS