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The Ebonie Manufacturing Company's costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labour-hours (DLH). At the beginning of 2022/2023, Ebonie adopted the following standards for its manufacturing costs: The denominator level for total manufacturing overhead per month in 2022/2023 is 40,000 direct manufacturing labour-hours. Ebonie Manufacturing's flexible budget for January 2023 was based on this denominator level. The records for January indicated the following: Required 1 Prepare a schedule of total standard manufacturing costs for the 7800 output units in January. [2 marks] 2 For the month of January 2023 , calculate the following variances, indicating whether each is favourable (F) or unfavourable (U), in good format with workings: a Direct materials price variance, based on purchases b Direct materials efficiency variance c Direct manufacturing labour price variance d Direct manufacturing labour efficiency variance e Total manufacturing overhead spending variance f Variable manufacturing overhead efficiency variance g Production-volume variance. [8 marks] 3 Discuss at least 2 possible reasons for each of the above variances. [8 marks] 4 Explain the importance of performing variance analysis as part of the management accounting function? [6 marks] 5 Explain how management will use the results of this variance analysis. [6 marks]

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