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Question 3 (20 marks) The Medi Company manufactures and sells Product X. The company's costing system has two direct-cost categories: direct materials and direct manufacturing labour. Both fixed and variable overhead are allocated to products on the basis of standard direct manufacturing labour-hours (DLH). At the beginning of 2018, Medi adopted the following standards for its manufacturing costs: Cost per output unit $20.00 $38.40 $12.00 $9.60 $80.00 Input 4 kg at S5 per kg 1.2 hrs at $32 per hr $10 per DLH $8 per DLHH Direct materials Direct manufacturing labour Variable manufacturing overhead Fixed manufacturing overhead Standard manufacturing cost per output unit The denominator level for manufacturing overhead per month in 2018 is 10,000 direct manufacturing labour hours. Medi's flexible budget for May 2018 was based on this denominator level. The records for May indicated the following . Direct materials purchased 35,000 at $4.8 per kg 35,000 kg 10,500 hrs at S30 per hr $110,250 8,000 output units Direct materials used Direct manufacturing labour Actual variable manufacturing overhead Actual production Required: the month of May 2018, compute the following variances indicating whether each is favourable (F) or unfavourable (U): (18 marks) (i) Direct materials price variance, based on purchases (ii) Direct materials efficiency variance (iii) Direct manufacturing labour price variance (iv) Direct manufacturing labour efficiency variance (v) Variable manufacturing overhead spending variance (vi) Variable manufacturing overhead efficiency variance (b) Suggest a possible connection between direct materials price 2 marks) variance and direct materials efficiency variance

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