. - + act Question 2 (20 marks) Michael Roberts is a cost accountant and business analyst for HP Clothing Company (HPCC), which manufactures expensive T-shirts. HPCC uses two direct cost categories: direct materials and direct manufacturing labor. It allocates manufacturing overhead to production based upon labor hours used At the beginning of 2020, HPCC adopted the following standards for each T-shirt: Standard Quantity Standard Price Input Or Hour Or Rate Direct materials $9/kg Direct labor 2 hours $8 /hour Variable overhead 2 hours $5/hour 3.1 kg Actual results for April 2029 were as follows: Production 3,200 T-shirts Direct materials purchased 12,900 kg. at $10 kg Direct materials used 9,000 kg Direct labor 7,200 hours for $59,000 Variable manufacturing overhead S 35,600 Required: a) Compute the standard variable product cost per unit. (4 marks) b) For the month of April 2020, compute the following variances, indicating whether each is favorable or unfavorable: Direct materials price variance, based on purchases (2 marks) ii. Direct materials quantity variance (2 marks) iii. Direct labor rate variance (2 marks) iv. Direct labor efficiency variance (2 marks) Variable manufacturing overhead rate variance (2 marks) vi. Variable manufacturing overhead efficiency variance (2 marks) c) Explain the possible reasons of any two unfavorable variances for direct costs and suggest the way to rectify them. (4 marks) V