Fuchsia Toy Company manufactures only one product, Denny the Dinosaur. The company uses a standard cost system and has established the following standards per unit of Denny the Dinosaur: Direct Materials Direct Labour Standard Quantity 3.0 kgs. 1.3 hours Standard Price 7.50 per kg. 12.50 Standard Cost 22.50 16.25 0 During May, the following activity was recorded by the company: The company produced 5,000 units during the month. A total of 20,000kg of material were used, purchased at a cost of 135,000. The company employs 35 persons to work on the production of Denny the Dinosaur. During May, each worked an average of 160 hours, at an average rate of 13 per hour. The company's management wishes to determine the efficiency of the activities related to the product of Denny the Dinosaur. Required: Compute the following variances for May: a) The materials price and quantity variances. (10 MARKS] AND b) The labour rate and efficiency variances. (10 MARKS] AND C) In the past, the 35 persons employed in the production of Denny the Dinosaur consisted of 20 experienced workers and 15 inexperienced assistants. During May, the company experimented with 23 experienced workers and 12 inexperienced assistants. Would you recommend that Fuchsia continue with the new labour mix? [5 MARKS] AND Page 5 of 6 BMAN21040 REPRINT The direct materials were purchased from a new supplier who is eager to enter into a long-term purchase contract. Would you recommend that Fuchsia signs the contract? [5 MARKS]