SD 79 Ltd makes a single product and operates a standard costing system. All goods produced in the month are sold and no inventories are held.

1. Budgeted monthly production and sales for August 2020 were 2000 units.

2. The standard costs per unit were as follows:

Direct material 2.9 kilos at $1.60 per kilo

Direct labour 0.75 hours at $2.35 per hour

3. The actual results for August were as follows:

Production and Sales 2400 units

Materials used 6200 kilos

Material cost $ 10500

Labour hours 1900

Labour cost $ 5100

REQUIRED

(a)

Calculate the following variances:

1. (i) Material price variance

2. (ii) Material usage variance

3. (iii) Total material variance

4. (iv) Labour rate variance

5. (v) Labour efficiency variance

6. (vi) Total Labour variance

7. Suggest one reason for each of the variances calculated in (a) above.

8. Outline the main advantages of Variance Analysis.