Hilda Ltd uses the standard costing system. The standards for Product Z100 are as follows:

Material	4 kilograms at R2.50 per kilogram
Labour	4 hours at R100 per hour
Variable overheads	R40 per labour hour
Fixed overheads	R48 000
Normal production	24 000 units per month

Actual production for the month of November 2016 on Product Z100 is:

Material	81 000 kilograms used at R2.50 per kg
Labour	78 000 hours worked at R96 per hour
Variable overheads	R44 per labour hour
Fixed overheads	R53 000
Normal production	20 000 units

Required: 1.1 Calculate and comment on the following variances:

1.1.1 Raw material usage variance. (6)

1.1.2 Fixed overhead spending variance. (6)

1.1.3 Variable overhead efficiency variance. (6)

1.2 Explain the underlying causes for variances. (6)

1.3 Discuss the merits of Budgeting. (6)