1. Blue Emory Ltd. manufactures one product and uses a standard costing system. The following standard cost card is available for its product:

STANDARD VARIABLE COST CARD ONE UNIT OF PRODUCT
Direct materials: 2 pounds x $50 per pound	$100.00
Direct labour: 1.5 hours x $20 per hour	30.00
Variable overhead: 1.5 hours x $10 per hour	15.00
Total standard variable cost per unit	$145.00

The company records materials price variances at the time of purchase.

The following activities occurred during the month of February:

Materials purchased	3,000 pounds at $48 per pound
Materials used	2,100 pounds
Units produced	1,000 units
Direct labour	1,400 hours at $25 per hour

Calculate the following variances and indicate if they are favourable (F) or adverse (A):

I. Material price [2.5 marks]

II. Material usage [3 marks]

III. Total material [1 mark]

IV. Labour rate [2.5 marks]

V. Labour efficiency [3 marks]

VI. Total labour [1 mark]

C. Provide one (1) possible cause for each of the variances calculated in B above for:

I. Material price [1 mark]

II. Material usage [1 mark]

III. Labour rate [1 mark]

IV. Labour efficiency [1 mark]