QUESTION 9: Variance Analysis [14 marks] Treehouse Beds produce bunk beds for children. They sell their beds through a variety of retail outlets. The standard cost for producing one of their most popular beds are as follows: Manufacturing costs Standard Price Standard Quantity Standard Unit cost 50 metres 5 hours $2.50 per metre $10.00 per hour $125.00 $50.00 Direct Materials (1 x 12" treated pine) Direct Labour Manufacturing Overhead Variable Fixed Standard Manufacturing cost per unit 5 hours $5.00 per hour $25.00 $40,00 $240.00 Treehouse's master budget was based on planned production and sales of 3 000 beds. Actual results were as follows: Produced 2 500 beds Purchased and used 130 000 metres of direct materials for a total cost of $312 000 Total direct labour cost was $123 750 for 11 250 hours Variable overhead cost was $54 000 Fixed overhead was $115 000 Required 1. Calculate the following variances and label them as either favourable (F) or unfavourable (U). Show all workings: [12 marks] . Direct Materials Price Variance Direct Materials Quantity/Volume Variance Total Direct Materials Variance Direct Labour Price Variance Direct Labour Quantity/Volume/Efficiency Variance Total Direct Labour Variance . 2. How can the analysis of budget variances lead to continuous improvement in an organisation? [2 marks]