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Question 3 (20 marks) Better Co. Manufacturing's costings 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 DMLH (direct manufacturing labour
hours). At the beginning of 2022 , Better Co. adopted the following standards for its
manufacturing costs: The denominator level for total manufacturing overhead per month in 2022
is 40,000 DMLH. Better Co. flexible budget for January 2022 was based on this denominator
level. The records for January indicate the following: Required: 1. Calculate/prepare a schedule
of the standard manufacturing costs for the 7,800 output units in January 2022. (5 marks) 2. For
January 2022 , calculate the following variances, indicating whether each is favourable (F) or
unfavourable (U) ( 7 X 2 marks each, 1 bonus mark) a) direct material rate variance, based on
purchases b) direct material efficiency variance c) direct manufacturing labour rate variance d)
direct manufacturing labour efficiency variance e) total manufacturing overhead rate variance f)
VMOH efficiency variance g) production volume variance