Johnson Company set the following standard unit costs for its single product.

RM

Direct materials (7 kg @ RM5 per kg) 25

Direct labor (5hrs @ RM10 per hr) 30

Factory overhead-variable (5hrs @ RM3 per hr) 9

Factory overhead-fixed (5hrs @ RM1 per hr) 3

Total standard cost 67

The predetermined overhead rate is based on a planned operating volume of 90% of the productive capacity of 100,000 units per quarter. The following flexible budget information is available.

Operating Levels

Production in units 80% 90% 100%

Standard direct labor hours 32,000 36,000 40,000

Budgeted overhead 96,000 108,000 120,000

Fixed factory overhead RM324,000 RM324,000 RM324,000

Variable factory overhead 480,000 540,000 540,000

During the current quarter, the company operated at 80% of capacity and produced 32,000 units of product; direct labor hours worked were over 100,000. Units produced were assigned the following standard costs:

RM

Direct materials (224,000 kg @ RM5 per kg) 1,120,000

Direct labor (160,000hrs @ RM10 per hr) 1,600,000

Factory overhead (160,000hrs @ RM4 per hr) 640,000

Total standard cost 3,360,000

Actual costs incurred during the current quarter follow:

Direct materials(200,000 kg @ RM5.20 per kg) 1,040,000

Direct labor(140,000hrs @ RM9 per hr) 1,260,000

Fixed factory overhead costs 370,000

Variable factory overhead costs 480,000

Total standard cost 3,150,000

Required:

(a)Compute the direct materials cost variance, including its price and quantity variances. Give your comment on the variances.

(b) Compute the direct labor variance, including its rate and efficiency variances. Give your comment on the variances.

(c)Comment on the variances for the direct material and direct labor.