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Cabouy Company manufactures a product with the following standard costs: Direct materials 40 metres @ $2.70 per metre $108 Direct labour 8 hours @ $18.00

Cabouy Company manufactures a product with the following standard costs:

Direct materials 40 metres @ $2.70 per metre $108

Direct labour 8 hours @ $18.00 per hour $144

Total standard prime cost per unit of output $252

The following information pertains to the month of July 2020:

Direct material purchased 41,000 metres @ $2.76 per metre = $115,920

Direct material used 35,000 metres

Direct labour 7,200 hours @ $18.30 per hour = $131,760

Actual July 2020 production was 1,150 units.

Required

Calculate the following variances for the month of July, indicating whether each variance is favourable or unfavourable:

1.Direct material price variance.(2 Marks)

2.Direct material quantity variance.(2 Marks)

3.Direct labour rate variance.(2 Marks)

4.Direct labour efficiency variance.(2 Marks)

5.Discuss the possible causes of material price and efficiency variances. Identify the individuals responsible for these variances.

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