During January, Microchem Ltd produced 1000 units of special product called Stylex, and the counting records indicated the following:

Direct material purchased .................. 36 0000 kilograms @ $1.38 per kilogram

Direct material used ..................................................... 19 000 kilograms

Direct labour .................................................4 200 hours @ $18 per hour

Stylex has the following standard prime costs:

Direct material: 20 kilograms @ $1.35 per kilogram .................. $27.00

Direct labour hours 4 hours @ $17 per hour .............................. 68.00

Standard prime cost per unit ............................................... $95.00

Required:

1. Calculate the total standard direct material costs and direct labour costs for January.

2. For the month of January, calculate the following variances, indicating whether each is favourable or unfavourable:

(a) Direct material price variance.

(b) Direct material quantity variance.

(c) Direct labour rate variance.

(d) Direct labour efficiency variance.

3. Construct an Excel® spreadsheet to solve requirements 1 and. 2. Demonstrate how the solution will change if the following information changes: the standard direct labour rate is $20 per hour and the standard direct material price is $1.50 per kilogram?