Question 7 (16 marks) (a) Keengolfer Company manufactures a single product, Magicputter. The standard cost specification sheet shows the following standards for one unit of Magicputter: 3kg of raw material @ $8 per kg $24 2 hr of direct labour @ $15 per hour $30 Overhead: Fixed - $4 per direct labour hour $ 8 Variable - $3 per direct labour hour $ 6 The fixed overhead allocation rate is based on normal monthly capacity of 12000 direct labour hours. Fixed overhead and production are expected to be spread evenly throughout the year. A total of 5800 Magicputters were produced during July. Actual costs incurred during July were: 20000 kg of raw material were purchased @ $8.50 per kg 17300 kg of raw material were used. 12000 direct labour hours were worked at an average wage rate of $15.50 per hour Actual overhead incurred: Fixed $50000 Variable $34000 Required: Compute the following variances for the month of July: (i) Direct material price variance (1 mark) (ii) Direct material quantity variance (1 mark) 22