Dasebre Ltd produces and sells one product with the brand name Sobolo. The standard cost for one unit being as follows:

$

Direct material A - 10 kilograms at $20 per kg200

Direct material B - 5 litres at $6 per litre30

Direct wages - 5 hours at $6 per hour30

Variable production overhead50

Total standard cost310

The variable production Overheads is incurred in direct proportion to the direct labour hours worked. The budgeted sales volume for the month of May was 900 units at Standard price of $350

Actual results for the month of May are as follows:

Production and Sales800 units

Material A7,800 kg used, costing $ 159,900

Material B4,300 litres used, costing $ 23,650

Direct wages4,200 hours worked for $ 24,150

Variable production overhead$ 46,200

Sales proceeds$ 320,000

The Managing Director of Dasebre Ltd does not understand why there are differences between the standard and the actual costs and has tasked you as a Management consultant to undertake a variance analysis to investigate the differences recorded for the year under review.

Note: Computations are required to support your analysis

Required: Write your report to the Managing Director, highlighting all the possible variances in Material, Labour, Variable Overheads and Sales and their possible causes.