The Litton Company has established standards as follows:

Direct materials: 3 kg @ $4/kg = $12 per unit

Direct labor: 2 hours @ $8 per hour = $16 per unit

Variable mfg overhead: 2 hours @ $5 per hour = $10 per unit

Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.

Units produced	600
Direct material used	2,000
Direct material purchased (3,000 kg)	$11,400
Direct labor cost (1,100 hrs)	$9,240
Variable MOH cost incurred	$5,720

The company applies variable manufacturing overhead to products on the basis of direct labor hours.

REQUIRED:

1. Compute and name the relevant variances for direct material, direct labour, variable and fixed manufacturing overheads.

2. Which two variances (be specific) would you bring to the attention of management? Explain the impact on profitability. What could have possibly caused these variances?