1. A favorable materials price variance combined with an unfavorable materials quantity variance is a likely indication that the company is using a relatively quality or grade of materials. a. low. b. high Use the following information to answer questions 2 - 3: Arrow Industries uses a standard costing system and has established the following standard cost for direct materials to produce one unit: 3 pounds @ $6.00 per pound. During May, Arrow purchased 50,000 pounds at $6.40 per pound and used 40,000 pounds to produce 14,000 units. 2. What is the materials price variance? a. $16,000 unfavorable. b. $16,000 favorable. c. $20,000 unfavorable. d. $20,000 favorable. e. None of the above. 3. What is the materials quantity variance? a. $12,000 unfavorable. b. $12,000 favorable. c. $12,800 unfavorable. d. $12,800 favorable. e. None of the above. 4. If the labor spending variance is $500 favorable and the labor efficiency variance is $300 unfavorable, what is the labor rate variance? a. $200 unfavorable. b. $200 favorable. c. $800 unfavorable. d. $800 favorable. e. None of the above