Cute and Cuddly Ltd manufactures soft toys and has captured a large part of the Australian and South-East Asian market. It imports its fabrics from overseas and because of the recent favourable exchange rates has made a significant foreign exchange gain.

The managing director has also been informed that the standard costing system implemented in January 2020 shows that savings have been made in purchasing direct materials and in paying for direct labour. He is therefore very keen to evaluate the outcome of the standard costing system that was recently implemented and provides you with the following data for the month of May 2020:

Budgeted

Actual

Fixed Manufacturing Overheads

$22,500

$25,000

Output in units for May 2020

45,000 units

47,500 units

Standard 2 kgs

Actual 2.2 kgs

Direct materials - input for each unit of output

Direct materials price per unit

Standard. $12.00 per kg

Actual. $11.75 per kg

Direct labour

Standard. 3 hours per unit of output

ACTUAL 147,250 hours

Direct labour rate

Standard. $15 per hour

ACTUAL. $13.50 per hour

Variable manufacturing overhead rate

Standard. 18 per direct labour hour

ACTUAL. $2,600,000

Required:

Calculate the following variances:

a)Direct materials Price Variance and Direct material Quantity Variance

b)Direct Labour Rate Variance and Direct Labour Efficiency Variance

c)Fixed Overhead Budget Variance and Fixed Overhead Volume Variance

d)Variable Overhead Efficiency and Variable Overhead Spending Variances