Manufacturing costs	Standard Quantity	Standard Price	Standard Unit cost
Direct Materials	10 metre	$2.50 per metre	$25.00
Direct Labour	2 hours	$10.00 per hour	$20.00
Manufacturing Overhead
Variable	1 hours	$5.00 per hour	$5.00
Fixed			$10.00
Standard Manufacturing cost per unit			$60.00

1. Calculate the following variances and label them as either favourable (F) or unfavourable (U). Show all workings: [12 marks]

• Direct Materials Price Variance
• Direct Materials Quantity/Volume Variance
• Total Direct Materials Variance
• Direct Labour Price Variance
• Direct Labour Quantity/Volume/Efficiency Variance
• Total Direct Labour Variance
• 2.How can the analysis of budget variances lead to continuous improvement in an organisation? [2 marks]

Adventure Mattresses master budget was based on planned production and sales of 6 000 mattresses for 2020. Actual results were as follows: Produced 2 500 mattresses Purchased and used 120 000 metres of direct materials for a total cost of $360 000 Total direct labour cost was $123 750 for 11 250 hours Variable overhead cost was $54 000 Fixed overhead was $115 000