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

GHS

Direct material A - 10 kilograms at GHS20 per kg200

Direct material B - 5 litres at GHS6 per litre30

Direct wages - 5 hours at GHS6 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 GHS350

Actual results for the month of May are as follows:

Production and Sales800 units

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

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

Direct wages4,200 hours worked for GHS 24,150

Variable production overheadGHS 46,200

Sales proceedsGHS 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.