Question 27 At the end of June, the manager of the B.C. manufacturing plant was provided with the following variance analysis report. Favourable (F)/ Unfavourable (U) Budget 300,000 Actual 315,000 Variance 15,000 > Production in units Production costs: Direct material Direct labour Variable overhead costs Fixed overhead costs Total production costs > $532,309 750,000 120,000 142,500 $1,544,809 $536,480 763,910 124,650 136,070 $1,561,110 $(4,171) (13,910) (4,650) 6,430 $(16,301) > > The manager immediately called the production supervisor, demanding an explanation for the large unfavourable variance for the quarter. The production supervisor was puzzled. He thought the cost-cutting measures they had incorporated were beginning to work. He certainly wasn't expecting such a large discrepancy. The standard rates the plant was using with its normal costing system are summarized below. Volume Cost 1.10 kg per unit $1.60 per kg 0.25 hour per unit $10.00 per hour Direct material Direct labour Predetermined overhead rate: Variable Fixed 0.25 hour per unit 0.25 hour per unit $1.60 per hour $1.90 per hour Other relevant information: 1. 2. 3. A total of 354,000 kg of direct materials were purchased during the quarter at a cost of $1.65 per kilogram. A total of 335,300 kg of direct materials were used in production to manufacture 315,000 units. Payroll recorded 77,950 direct labour hours at an average cost of $9.80 per hour. (ai) Calculate the following production variances. Material price variance Material quantity variances Unfavourable Neither favourable nor unfavourable Favourable Labour price variance Labour efficiency variance Variable overhead variance