SECTION B ANSWER ANY TWO (2) QUESTIONS QUESTION 3 [20 MARKS] (a) The following are the standard cost of Tuscan Pic 50 kg @Rs 2.5 Raw material Direct labour 14 hrs @ Rs 4.75 Actual results Production Direct material purchased Opening stock direct materials Closing stock direct materials Wages paid for 2020 hrs REQUIRED Calculate: (1) Material price variance (ii) Material usage variance (iii) Total material variance (iv) Labour rate variance (v) Labour efficiency variance (vi) Total labour variance Rs 125 Rs 66.50 150 units 7,000 kg @ a cost of Rs 18,200 1,300 kg 850 kg 9898 [2 marks] [2 marks] [2 marks] [2 marks] [2 marks] [2 marks] (b) The Managing Director's daughter is attending a university degree course in accounting & finance. During a telephone call to his daughter the Managing Director asked her to enquire from her Lecturer about the following: "Quite possibly, individual variances should not be looked at in isolation. One variance might be inter-related with another, and much of it might have occurred only because the other, inter-related, variance occurred too." REQUIRED Critically assess the above statement giving one example between interdependence of materials price and usage variances and one example between interdependence of labour rate and labour efficiency variances. [8 Marks]