QUESTION III - Variance Analysis (8 Marks) Duncan Inc. has established the following standards: Direct materials: Direct labour Variable mfg overhead: 3 kg @ $4/kg = $12 per unit 2 hours @ $8 per hour = $16 per unit 2 hours @ $5 per hour = $10 per unit Actual data for the past year are given below. The company records the materials price variance when materials are purchased. Units produced Direct material used Direct material purchased (3,000 kg) Direct labour cost (1.100 hrs) Variable MOH cost incurred 600 2,000 $11.400 $9,240 $5,720 The company applies variable manufacturing overhead to products on the basis of direct labour hours. REQUIRED: 1. Compute and name the relevant variances for direct material, direct labour, and variable manufacturing overheads. 2. Which two variances would you bring to the attention of management (choose the 2 largest variances)? Explain the impact on profitability. What could have possibly caused these variances