The manager of Dunder Mifflin Company sets standard that in order to make one unit of product AB1, the company will require 0.85 KG of raw materials, that will be purchased at a price of $7/KG and direct labours will need 2 hours to manufacture one unit of the product AB1. The manager also planned to pay $11.50 per hour to the direct labours. The purchasing manager of Dunder Mifflin Company purchased a total of 6,700 KGs of raw materials, paying $47,235 in cash. The labours of the company worked for a total of 15582 hours in order to manufacture 7420 units of product AB1. The direct labour were paid salary and wages of $181,530. A total of 6300 KGs of raw materials were used to make the finished goods.

Required:

a. Calculate both material related variances and comment on your answer. (Show workings clearly) 8 Marks

b. Calculate both labour variances and comment on your answer. (Show workings clearly) 6 Marks