QUESTION 5 (20 MARKS, 36 MINUTES Elso Ltd ("Elso") manufactures large-scale solvents for factories and household cleaning The company uses standard costing system as a way of monitoring its cost. The following information is available for Elso for the month of August 2021 Budgeted Sales and production volume 600 barrels Standard selling price per barrel N$1 750 Standard variable cost per barrel N$855 Actual Sales and production volume 620 barrels Actual selling prica per barrel N$1 690 Actual variable cost per barrel N$863 20 Loves Additional information: Standard cost card for one barrel of solvent Direct materials 34 litres @ N$15 per litre Direct labour 15 hours @ N$12,50 per hour Variable overheads 15 hours @ N$10,50 per hour NB: Overheads are absorbed on the basis of direct labour hours, Page 5 of 7 Actual cost and usage information Direct materials Direct labour Variable overheads Total cost Total usage (NS) 20 410 litres N$321 500 9 420 hours N$117 800 N$95 600 MARKS REQUIRED: Calculate the following variances and indicate whether the variance obtained Is favourable or unfavourable. 5.1. Material price variance BP-SP) SR 5.2. Material usage variance A-59) De 5.3. Labour rate variance 5.4. Labour efficiency variance 5.5. Variable overheads expenditure variance 5.6. Variable overheads efficiency variance 5.7. Explain the possible causes of the type of variance obtained in 5.1 and 5.37 TOTAL MARKS 3 3 3 3 3 2 20 Page 6 of 7