Farhan Ullah Aziz has been running an electronics manufacturing business for a long time. The company uses Direct Labor Hours as a cost driver for applying overheads to different products. For the following INDEPENDEDNT situations, identify which variances would likely occur and would they be favorable (write F), unfavorable (write U) or there would be no effect on that variance (write NE). Assume that in every situation, everything else remains constant.

Direct Materials Price Variance F or UF or NE

Direct Materials Quantity Variance F or UF or NE

Labor Rate Variance F or UF or NE

Labor Efficiency Variance F or UF or NE

Variable Overhead Rate Variance F or UF or NE

Variable Overhead Efficiency Variance F or UF or NE

1. Cheap, low cost maintenance tools are purchased resulting in workers having to re-work on several televisions, and wastage of direct materials and machine time.

2. Surprisingly, government reduced electricity prices.

3. The maintenance manager, in a bid to save on costs, reduced maintenance of machinery. The machines broke down more often than anticipated, resulting in loss of productive time for labor

4. There was a sudden surge in demand. The company had to pay higher than normal wages to get the work done during overtime.

5. Graduates from a highly ranked business school were hired in production department who would steal electronic components from the factory.

6. Transportation company increased charges for delivering raw materials to the company.

7. The company hired a LUMS MBA who could not schedule production runs properly, resulting in loss of time and wastage of materials.

8. The company produced more than anticipated.

9. The company installed solar power solution that reduced cost of utilities in the factory. This was not planned ahead in time.

10. The company increased marketing efforts in a bid to increase sales.