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Materials and Labour Variances QualiTech Company produces computer circuits in large batches. Materials for the circuits are formed and polished in specialized machines that require continuous maintenance and cleaning for each batch. After forming the materials for a set number of circuits, the machines are cleaned and prepared for the next batch of materials to be formed. The following standards for machine changeovers have been established: Direct materials (15 litres @ $1.80) $27.00 Direct labour (0.2 hr. @ $22.00) 4.40 Standard prime cost of a changeover $31.40 During the year, 400,000 litres of material were purchased and used for the changeover activity. There were 25,000 batches produced, with the following actual prime costs: Direct materials $740,000 Direct labour 107,500 (for 6,300 hrs.) Required: 1. Compute the materials and labour variances associated with the changeover activity, labelling each variance as favourable or unfavourable. Material Variances Price variance Usage variance Labour Variances Rate variance Efficiency variance 2. Conceptual Connection: What differentiates favourable variances and unfavourable variances? The input in the box below will not be graded, but may be reviewed and considered by your instructor.Performance Report Propel Company budgeted the following amounts: Variable costs of production: Direct materials 2 kilograms @ 0.75 per kilogram Direct labour 0.8 hr. @ $21.00 per hour Variable overhead 0.8 hr. @ $2.45 Fixed overhead Materials handling $6,800 Depreciation $3,200 At the end of the year, Propel had the following actual costs for production of 4,400 units: Direct materials $ 6,550 Direct labour 74,100 Variable overhead 8,722 Fixed overhead Materials handling 6,890 Depreciation 3,200 Required: Prepare a performance report using a budget based on the actual level of production. In the variance type column, type "F" for favourable and "U" for unfavourable. If the variance is zero, enter ("0") in the variance amount column and "N" for neither in the variance type column. (Note: Be sure to use capital letters.) Use a minus sign to enter negative values. Propel Company Performance Report Actual Budgeted Variance Variance Type (F or U or N) Units produced 100 Direct materials 000 0 Direct labour Variable overhead 100 000 0 Fixed overhead: Materials handling Depreciation Total