Jasmine Limited makes a single product, X, using a single raw material P. Standard costs relating to X have been calculated as follows.

Standard cost schedule

Per Unit (Rs)

Direct material, P, 100kg at Rs. 5 per kg 500

Direct labour, 10 hours at Rs.8 per hour 80

Variable production overhead, 10 hours at Rs.2 per hour 20

Fixed production overhead, 10 hours at Rs.1 per hour 10

Standard cost 610

Standard profit 290

Standard selling price 900

Relevant details of this production are as follows.

• Company expects to produce 1020 units in month of December 2019.
  • During December, 1000 units of product X were produced and sold at Rs. 975,000
  • 90000 kgs costing Rs.720000 were bought and used.
  • 8200 hours were worked during the month and total wages were Rs. 63,000.
  • The actual variable production overhead for the month was Rs. 25,000.
  • The actual fixed production overhead for the month was Rs. 9,800.
  • Actual profit was Rs. 157,200.

1. Identify possible causes for the variances and recommend corrective actions for adverse variances. (10 marks)