Q-2.

Highnoon Corporation is a producer of Plastic Toy. The standard cost per unit of product is as follows.

Direct materials2 pounds of plastic at Rs.5 per pound	Rs.10
Direct labor2 hours at Rs.12 per hour	Rs. 24
Variable manufacturing overhead	Rs. 8
Fixed manufacturing overhead	Rs. 6
Total standard cost per unit	Rs. 48

The master manufacturing overhead budget for the month based on normal productive capacity of 20,000 direct labor hours (10,000 units) shows total variable costs of Rs.80,000 (Rs.4 per labor hour) and total fixed costs of Rs.60,000 (Rs.3 per labor hour). Normal productive capacity is 20,000 direct labor hours. Overhead is applied on the basis of direct labor hours. Actual costs for November in producing 9,700 units were as follows.

Direct materials (20,000 pounds) Rs. 98,000

Direct labor (19,600 hours)Rs. 239,120

Variable overhead .Rs. 79,100

Fixed overhead ..Rs. 59,000

Total manufacturing costs ....Rs.475,220

The purchasing department normally buys the quantities of raw materials that are expected to be used in production each month. Raw materials inventories, therefore, can be ignored.

Requirements:

1. Material Price Variance and Material Quantity Variance
2. Labor Rate Variance and labor Efficiency Variance