direct material and usage and direct labor Tate and labor effiency

MU Ltd has acquired and started manufacturing their products in GSM Ltd. MU Ltd wants to evaluate their production efficiency with regard to one of their top selling products - MU soccer balls. Budgeted production was 18,500 units with the following standard costs for inputs per unit: Standard Cost Standard Usage per ball Direct Material $2.45 per kg 0.7 kg Direct Labour $20.50 per hour 0.9 hours Actual operating results for the year were as follows: Finished Goods Inventory: Beginning inventory at the start of the year Closing inventory at the end of the year Inventory sold during the year Direct Material: 21.500 kg Beginning Raw Material at the start of the year Closing Raw Material at the end of the year 21,700 kg Raw Material purchased during the year 13,200 kg at an actual cost of $33,000 Direct Labour: Actual Hours worked 15,750 hours $335,475 Actual Cost Required: 1. Calculate the two Direct Material variances, clearly classify each as Favourable (F) or Unfavourable (U), and interpret what each variance is indicating about the business (4 marks) 17,500 units 16,400 units 19,200 units