Fury Limited manufactures and sells a single product. The following information was available at the beginning of 2021:

Standard selling price 750

Planned production & sales (units) for the year 6,000

Standard Costs

Estimated direct materials (12 square metres at 16 per square metre) 192

Estimated direct labour (14 hours at 24 per hour) 336

At the end of 2021, Fury Limited established the following actual figures:

Production & sales 5,800 units produced and sold to customers for 770 per unit

Direct materials 75,000 square metres at 15 per square metre

Direct wages 88,000 hours at a cost of 23 per hour

Required:

a) Calculate the following:

(i). Total materials variance

(ii). Total labour variance

(b) To provide further information for the managers, calculate:

(i). the materials price and usage variances

(ii). the labour wage rate and efficiency variances

(c) Discuss two possible causes for each of the four variances calculated in part (b) above

(d) Explain key issues and problems that should be considered when setting and applying standard costs, such as those set by Fury Limited above.