Required

Calculate the following variances for the month of July, indicating whether each variance is favorable or unfavorable:

1. Direct material price variance. ( 3 Marks)

2. Direct material quantity variance. (3 Marks)

3. Direct labor rate variance. (3 Marks)

4. Direct labor efficiency variance. (3 Marks)

5. Discuss the possible causes of material price and efficiency variances. Identify the individuals responsible for these variances.

Willard Pty Ltd manufactures a product with the following standard costs: Direct materials 40 metres @ $2.70 per metre Direct labour 8 hours @ $18.00 per hour $144 Total standard prime cost per unit of output $252 $108 The following information pertains to the month of July 2009: Direct material purchased Direct material used Direct labour 42,000 metres @ $2.76 per metre = $115,920 36,000 metres 7,200 hours @ $18.30 per hour = $131,760 = Actual July 2009 production was 1,000 units