The summary production budget of a factory with a single product for a four week period is as follows: Production quantity 240 000 units

Production costs:

Material: 336 000 kg at 4.10 per kg

Direct labour: 216 000 hours at 4.50 per hour

Variable overheads: 475 200

Fixed overheads: 1 521 600

Variable overheads are absorbed at a predetermined direct labour hour rate. Fixed overheads are absorbed at a predetermined rate per unit of output.

During the four week period the actual production was 220 000 units which incurred the following costs:

Material: 313 060 kg costing 1 245 980

Direct labour: 194 920 hours costing 886 886

Variable overheads: 433 700

Fixed overheads: 1 501 240

The following are required:

(a) Calculate the cost variances for the period.

(b) Give reasons in each case why the direct labour efficiency, variable overhead efficiency and fixed overhead volume variances may have arisen.