Problem 3 Variances Analysis (20 marks)

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2019, AII estimated the following standard costs for one of their major products, the 10 -gallon plastic container. During June, Heavy Products produced and sold 1,500 containers using 2,850 pounds of direct materials (assuming same purchase and usage of the direct materials) at an average cost per pound of $57 and 1,200 direct manufacturing labor-hours at an average wage of $23.50 per hour. Required: a. For the month of June, please determine the following: ( 14 marks) - direct materials flexible budget variance - direct materials price variance - direct materials efficiency variance - direct labor flexible budget variance - direct labor price (or rate) variance - direct labor efficiency variance b. What are the possible reasons for the favorable or unfavorable direct material efficiency variance calculated above? ( 6 marks) (Total 20 marks)