QUESTION IV - Variance Analysis (8 Marks) The Litton Company has established standards as follows: Direct materials: 3 kg @ $4/kg = $12 per unit Direct labour: 2 hours @ $8 per hour = $16 per unit Variable mfg overhead:2 hours @ $5 per hour = $10 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. Units produced 1600 Direct material used 2,000 Direct material purchased (3,000 kg) $11,400 Direct labour cost (1.100 hrs) $9,240 Variable MOH cost incurred $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 (be specific) would you bring to the attention of management? Explain the impact on profitability. What could have possibly caused these variances