Manilow Company makes a perfume called Allure. The standard cost for one bottle of Allure is as follows:

Direct material 6 oz at $0.90 per oz

Direct labour 0.5 hours at $12.00 per hour

During the month, the following transactions occurred in manufacturing 10,000 bottles of Allure:

1. 58,000 oz of materials were purchased at $1.00 per oz
2. All materials purchased were used to produce the 10,000 bottles of Allure
3. 4,900 direct labour were worked at a total labour cost of $56,350.

Required:

1. Compute the following variance and state if they are favourable or adverse.

i. Material price [2.5 marks]

ii. Material usage [3.5 marks]

iii. Labour rate [2.5 marks]

iv. Labour efficiency [3.5 marks]

B. Outline two possible causes for EACH of the variances calculated above. [8 marks]