Question 1 Hats R Us Ltd has been producing hats, caps and beanies over a number of years. As part of a review of its manufacturing operations, the CFO and senior accountants are currently examining the direct 28 materia and direct labourvariances of the Herble product line. The typical production of the Herbie Marka line for a month is 500 units. The following information outlines thestandard costs for the production of one unit. In June, only 405 units were produced. There were some issues regarding the quality of the raw materials and the machinery utilised require re-calibration leading to delays. At the end of June, 360 metres of materials were utilised, 2,025 hours worked and $44,500 labour cost incurred in respect of the Herbie product line. The actual amount of materials purchased by the purchasing manager was 400 metres at a cost of $7,500 from a new supplier introduced by a business contact. 1a) Calculate the following variances. (State whether it is favourable or unfavourable). i. Direct Materials Price Variance; ii. Direct Materials Quantity Variance; iii. Direct Labour Rate Variance; iv. Direct Labour Efficiency Variance; 1b) 12 Comment on each of the variances calculated and any potential interactions. 1c) In determining which budget variance should be investigated further, elaborate two factors that management needs to consider when assessing the significance of the variance. 1d) Hats R Us Ltd is thinking of implementing a group incentive scheme. Discuss one advantage and one disadvantage of group incentive schemes. Question 2 Paints R Us Ltd. produces wall paints in its Paradis factory and utilisesfirst in First out process costing. Direct material (100\%) is added at the beginning of the production process, and conversion occurs uniformly throughout the production process. Opening WIP conversion was at 30% complete and Closing WIP conversion was at 75% complete. The following information was avallable in relation to the processing department for the month of December 2021: Pag