Case Number 03 Alkozay Ltd. Manufactures started production of its new product line (shirts) in the month of November, which it sells to customers for embroidering with various slogans and emblems. The standard cost card for the shirts is as follows. Direct materials Direct labor Standard Price AFN 1.60 per yard AFN 12 per DLH Standard Cost AFN 2.00 Standard Quantity 1.25 yards 0.25 DLH 3.00 Variable overhead Fixed overhead AFN 4 per DLH 0.25 DLH 1.00 AFN 6 per DLH 0.25 DLH 1.50 AFN 7.50 Bilal Nabi, operations manager, was reviewing the results for November when he became upset by the unfavorable variances he was seeing. In an attempt to understand what had happened, Bilal Nabi asked CFO Muhammad Javid for more information. He provided the following overhead budgets, along with the actual results for November. The company purchased and used 112,000 yards of fabric during the month. Fabric purchases during the month were made at AFN 1.45 per yard. The direct labor payroll ran AFN 249,260, with an actual hourly rate of AFN 12.10 per direct labor hour. The annual budgets were based on the production of 1,000,000 shirts, using 250,000 direct labor hours. Though the budget for November was based on 80,000 shirts, the company actually produced 82,000 shirts during the month. Fixed Overhead Budget Supervisory salaries Insurance Property taxes Depreciation Utilities Quality inspection Total Variable Overhead Budget Requirement Annual Budget AFN 260,000 November-Actual AFN 22,000 350,000 25,500 80,000 6,500 320,000 30,000 210,000 21,600 280,000 29,700 AFN 135,300 AFN 1,500,000 November- Actual Indirect materials Indirect labor Equipment repair Equipment power Total Annual Budget AFN 450,000 Per Shirt AFN 0.45 AFN 36,000 300,000 0.30 33,700 200,000 0.20 16,400 50,000 0.05 12,300 AFN 1,000,000 AFN 1.00 AFN 98,400 1. Calculate and determine the direct materials price and quantity variances for the month of November. (03) 2. Calculate and determine the direct labor rate and efficiency variances for the month of November. (03) 3. Calculate and determine the variable overhead spending and efficiency variances for the month of November. (03) 4. Provide a brief explanation of the possible causes of each variance in direct material, direct labor and overhead variance. (02)