Question 1:

Five Stars Companys standard and actual costs per unit are provided below for the most recent period. During this period, 600 units were actually produced.

			Product Standard Cost	Product Actual Cost
Materials	Metres	Unit Price Per Metre
Standard	4	$2.00	$8.00
Actual	4.1	$1.90		$7.79
Direct labour	Hours	Hourly Rate
Standard	3	$7.00	$21.00
Actual	3.2	$6.50		$20.80
Variable overhead	Hours	Hourly Rate
Standard	2	$3.00	$6.00
Actual	2.2	$3.10		$6.82
Total unit cost			$35.00	$35.41

Required:

Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable.

1. Materials price variance
2. Materials quantity variance
3. Direct labour rate variance
4. Direct labour efficiency variance
5. Variable overhead rate variance
6. Variable overhead efficiency variance 7. Please give some managerial suggestions based on your calculation.