Causes of Direct Material Variances:

1. Price Variance:
   • This variance can be caused by a change in the market price of materials, differences in the quality of materials purchased, or unanticipated bulk purchase discounts.
2. Usage Variance:
   • This variance may arise from inefficiencies in the production process, wastage, poor handling of materials, or the use of inferior or superior materials.

Causes of Direct Labour Variances:

1. Rate Variance:
   • This can occur due to changes in wage rates, overtime payments, or the employment of workers with a higher or lower skill level than initially planned.
2. Efficiency Variance:
   • Labour efficiency variance may be due to the poor performance of workers, machine breakdowns, inexperienced workers, or production delays affecting efficiency.