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Question 4 (30 marks): TAGO Ltd. produces and sells one product, TAD, the standard cost for one unit being as follows: Direct materials - 10

Question 4 (30 marks): TAGO Ltd. produces and sells one product, TAD, the standard cost for one unit being as follows:

Direct materials - 10 kilograms at 20/kg

200

Direct wages - 5 hours at 6 per hour

30

During October 2020 the actual results were as follows:

Production

750 units

Direct materials

7,800 kg used, costing 159,900

Direct wages

4,200 hours worked for 24,150

Required: Calculate the following variances for the month of October 2020, identify possible causes for the adverse/unfavorable variance(s) calculated and recommend corrective actions for improvement:

1.Direct wage rate variance; and 2. Direct labour efficiency variance.

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