Question 3 MNO produces various products for office use. Brand XY is one of the products of MNO. The company uses a traditional standard costing system to control costs and has established the following materials, labour, and overhead standards to produce one unit of Brand XY. Direct materials - 1.5 Kg @ $12 per kg Direct labour - 0.6 hours @ $24 per hour Variable manufacturing overhead - 0.6 hours @ $5.00 per hour During the year, the company produced and sold 3,000 units of Brand XY. 8,000 kgs of direct materials were purchased @ $11.50 per kg. Out of these 8,000 kgs, 6,000 kgs were used. There was no inventory at the beginning. 1,600 direct labour hours were recorded during the period at a cost of $40,000. The variable manufacturing overhead costs = $7,200. 1. Calculate the following variances below for the company. (10 Marks) a) The materials price variance and materials quantity variance. b) The direct labour rate variance and direct labour efficiency variance. c) The variable overhead spending variance and variable overhead efficiency variance. 2. Explain the above variances relevance and their potential impact on the organization. (10 Marks)