Queenstown Baggage Limited has developed the following cost standards for the production of its leather backpacks:

	Standard cost per backpack
Leather (0.9 metre x $22 per metre)	$19.80
Direct labour (1.3 hours x $9 per hour)	$11.70
Variable overhead (1.3 hours x $15 per hour)	$19.50

Variable overhead at the company is applied on the basis of direct labour hours. The actual results for last month were as follows:

Number of backpacks produced	15,000
Direct labour hours incurred	18,800
Metres of leather purchased	14,500
Metres of leather used in production	14,100
Cost of leather purchased	$306,675
Direct labour cost	$159,800
Variable overhead cost	$285,760

Required:

i. Calculate the materials price variance, and mention three potential reasons for the variance result.

ii. Calculate the materials quantity variance, and mention three potential reasons for the variance result

iii. Calculate the labour efficiency variance, and mention three potential reasons for the variance result

iv. Joshwood Slovakia has recently joined Kerikeri Baggage Limited, a sister company of Queenstown Baggage Limited, as a Business Analyst. While going through last years variance analysis report, he found that the company uses direct labour hours as the basis for applying variable manufacturing overhead costs. He also found that, last year, the companys labour efficiency variance was unfavourable. However, he noticed that variable overhead efficiency variance was missing in the last years report. Joshwood wonders whether the last years variable overhead efficiency variance was favourable or unfavourable. What do you think, and why? [Maximum word limit: 120 words].