Katarina (Pty) Ltd (Katarina) is a company which manufactures furniture. The company uses standard costing system. The following is the budget for the month of January 2022 for 25000 units.

Direct Material 42 000 metres at 6.50 peer metre R273 000 Direct Labour 22 000 hours at 9.50 per hour R209 000 Variable Manufacturing Overheads 2.50 per labour hour R55 000 Fixed Manufacturing overheads R150 000

During January 2022 the company started and completed 26 000 units and the following transactions were recorded: Purchases of material:

43 000 metres at R6.35 per metre

Material issues: 44 000 metres

Direct wages paid: 22 000 hours at R9.35 per hour Manufacturing overheads incurred:

Variable R43 500 Fixed: R152 000

REQUIRED Use the information given above to calculate the following variances and, in each case, provide a possible reason for the variance: Each answer must indicate whether the variance is favourable (F) or unfavourable (U).

Material issue price variance (4 marks)

Direct labour rate variance (4 marks)

Direct labour efficiency variance (4 marks)

Variable overheads expenditure variance (4 marks) Variable overheads efficiency variance (4 marks)

Fixed overheads volume variance. (5 marks)