Question 3: Variance Analysis (20 marks in total) The following standard cost data relate to the operation of Dragon Company for 2016. The standard cost per unit is based on the normal annual production of 15,000 units. Standard cost per unit Direct materials 4kg @ $5.00 per kg $ 20.00 Direct labour 2hrs @ $12.50 per hr $ 25.00 Variable overhead 2hrs @ $3.00 per hr $ 6.00 Fixed overhead 2 labour hrs @ $5.00 per hr $ 10.00 Total $ 61.00 Actual production in 2016 was 10,000 units. The following data was obtained from Dragon Companys records: Direct material purchases 45,000 Kilograms Cost of direct materials purchases $ 202,500 Actual direct labour hours 25,000 Hours Actual direct labour costs $ 325,000 Actual variable overhead costs $ 100,000 Actual fixed overhead $ 125,000 Required: 3a. Calculate and show flexible budget variance for each cost item. 3b. Calculate the following variances and indicate whether they are favourable or unfavourable. i.Direct material price variance ii.Direct material efficiency variance iii.Direct labour price variance iv.Direct labour efficiency variance v.Variable manufacturing overhead spending variance vi.Variable manufacturing overhead efficiency variance vii.Fixed manufacturing overhead spending variance viii.Fixed manufacturing overhead efficiency variance