BUSI 294 Assignment -Variance Analysis Question 1 Chisholm Company produces several products, including a karate robe. The company uses a standard cost system to assist in cost control. According to the standards that have been set for the robes, the factory has a denominator level of activity of 780 direct labour hours which should result in the production of 1,950 robes. The standard costs associated with this level of production are as follows: Direct materials Direct labour Variable manufacturing overhead* Fixed manufacturing overhead* Total $35,490 7,020 2,340 4,680 $ per unit of product $18.20 3.60 1.20 2.40 $25.40 . Based on direct labour hours During May, the factory worked only 760 direct labour hours and produced 2,000 robes. The following actual costs were recorded during the month: Direct materials (6,000 metres) Direct labour Variable manufacturing overhead* Fixed manufacturing overhead* Total $36,000 7,600 3,800 4,600 $ per unit of product $18.00 3.80 1.90 2.30 $26.00 At standard, each robe should require 2.80 metres of material. All of the materials purchased during the month were used in production. Required: Compute the following variances for April: 1. The materials rate and usage/efficiency variances