Question 1: (14 marks) Cartier Co manufactures wooden toy vehicles. The company operates a standard costing system and values inventory at standard cost. The following is an extract of a partly completed spreadsheet for calculating variances in Dec 2021. Standard Cost Card - Toy Vehicle $ per vehicle Selling price 250 Direct material 5 kgs per unit @ $7 35 Direct labour 6 hours @ $12 per hour 72 Total production overhead

Variable production overhead 6 hours @ $5 per DLH 30 Fixed production overhead 6 hours @ $3 per DLH 18 Actual and budgeted activity levels in units Budget Actual Sales 25,000 25,600 Production 25,000 26,000 Actual sales revenue and variables costs $ Sales 6,266,880 Direct material purchased (150,000 kgs) 1,125,000 Direct labour (150,000 hours) 1,920,000 Variable production overhead 832,000 Fixed production overhead 440,000 Additional information: Annual budgeted production capacity 300,000 units The standard production overhead costs per unit is based on direct labour hours. Based on capacity of 200,000 direct labour hours per month. Direct material used 128,000 kgs

Required: (a) Calculate the following variances for Dec 2021 and state whether it is favourable or unfavourable: i) Total direct material variances (2 marks) ii) Total direct labour variances (2 marks) iii) Total variable overhead variances (2 marks) iv) Total fixed overhead variances (2 marks) (b) Cartiers management accountant thinks that the direct labour rate and efficiency variances for Dec could be interrelated. Briefly explain how the two direct labour variances could be interrelated.