Bruno Limited manufactures padlocks for which they have established unit standard costs as shown below:

During July, 400 padlocks were manufactured at the costs shown below. There was no opening stock.

Material purchased 2,500 kg @ £0.88 per kg £11,000
Material used 9,500 kg
Direct labor 1,100 hours @ £11.80 £12,980

Indirect Costs
Variable overhead £ 2,600
Fixed overhead £ 1,420

The flexible budget for this company required 1,400 direct labor-hours of operation at the month activity level used to set the fixed overhead rate.

Required:
1. Calculate the following variances, indicating whether each is favorable or unfavorable:

a. Direct material cost and usage variances
b. Direct manufacturing labor rate and efficiency variances
c. Variable overhead expenditure and efficiency variances
d. Fixed overhead expenditure, volume, capacity, and efficiency variances
e. Reconcile the standard and actual costs of production

2. What are the possible causes of overhead variances?