Home Security Designs Ltd manufactures fences for homes.A certain fence requires the following:

Direct materials standard10 metresat $5 per metre

Direct labour standard5 hours at $10 per hour

Budgeted fixed overheads$120,000 per year

During 2019, the company made 1,500 fences and used 14,000 metres of materials costing $68,600.Direct labour totaled 7,600 hours for $79,800. Fixed overheads were $118,000.

1Compute the direct materials price variance, efficiency variance and flexible budget variancefor the year.

2Compute the direct labour price variance, efficiency variance and flexible budget variancefor the year.

3Describeonepossible cause for the variancesyou calculated above

4Direct materials price variance

5Direct materials efficiency variance

6Direct labour price variance

7Direct labour efficiency variance

8Managers should be rewarded for favourable variances and punished for unfavourable variances. Do you agree? Explain.