1. Zoom Tech Ltd investigates all variances above 10 percent of the flexible budget. The flexible budget for direct labour is $50,000. The direct labour rate variance is $4 000 unfavourable, and the direct labour efficiency variance is $6,000 favourable.

Provide two possible explanations for each variance identified in this question.

2. A flexible budget for Aqua Company for 5 000 hours is shown below:

Variable overhead $ 20 000

Fixed overhead $ 11 000

Total overhead $ 31 000

Required:

Prepare a flexible budget for 10 000 hours and 14 000 hours.