Tempro, Inc., uses a standard cost accounting system. Variances for the year ended December 31,2005 , were as follows:

Managers at Tempro are considering the following changes in operations for the year ending December 31, 2006.
1. An across-the-board pay increase of \(5 \%\) will be given to all personnel.
2. The purchasing department will be allowed to purchase lower grades of materials.
3. Several key production workers will be transferred into managerial positions. These workers will be replaced either by new hires or by production personnel who will be transferred from another department.
4. Additional inspectors will be hired to ensure quality production. The cost of these inspectors will be considered administrative and general expense.
Required Assuming that product standards are not changed from the previous year, what impact, if any, would you expect each of the changes to have on the company's variances? Consider each decision separately, and identify the variance that would be affected by the decision and whether the change would increase or decrease the prior-year variance. Explain your answers.

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Material price variance Material usage variance Labor rate variance Labor efficiency variance Unfavorable Favorable Favorable Unfavorable