The L Company produces one product whose standard cost for the year 20x3 was as follows. Direct materials $40.00 Direct labour 40.00 Manufacturing overhead 23.75 $103.75 Direct materials are purchased at $8 per Kg and each unit required about 5kg, Direct Labour requires 2.5 hours at $16 per hour. Manufacturing Overhead is applied on the basis of Direct Labour hours. Each unit requires 2.5 Direct labour hours at a rate of 9.5 The denominator level of activity is 40,000 hours and the total budgeted fixed overhead is $180,000. The budgeted selling price of the product is $145. At the end of 20x3, the following actual results are produced by the accounting department Units produced and sold 18,000 Selling price $155 Direct labour hours 39,750 Total direct labour cost $606, 187.50 Direct materials purchased 110,000 kg Average cost of direct materials purchased $9.35 Variable overhead $106,000 Fixed overhead $175,000 Direct material used 88.750kg Required a. Prepare the VOH and FOH Variances (8 marks) b. Explain each variance (5 marks) c. Suggest possible improvements that can be made with the variances (2 marks)