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Question 3 (18 marks) Part A East Coast Office Kits (ECOK) makes prefabricated home office kits that they then assemble at a customer's home. A particular office kit requires the following standard amounts: Direct materials: 10 square metres at $5 per metre Direct labour: 5 hours at $10 per hour During the second quarter ECOK made 1,500 home office kits and used 14,000 square metres of material costing $68,600. Direct labour totalled 7,600 hours for $79,800. Required: 1. Compute the direct materials price and efficiency variances for the quarter. (3 marks) 2. Compute the direct labour price and efficiency variances for the quarter. (3 marks) 3. Explain the options ECOK has for computing the materials price variance, assuming ECOK had purchased 20,000 square metres of direct materials. Discuss any benefits or disadvantages for ECOK of the options. (6 marks) Part B WaterWorks makes large water pumps. The budgeted fixed overhead costs for 2020 totalled $27,000. The company uses direct labour hours for fixed overhead allocation and anticipated it would use 900 hours during 2020 to make 45,000 water pumps. The actual number of water pumps produced in 2020 was 48,000 and they required 960 labour hours to make. Actual spending on fixed overheads was $28,000. Required: 1. Compute the fixed overhead spending variance and explain its meaning. (3 marks) 2. Compute the production volume variance and explain its meaning

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