2. DU 16 4 points Gamma Manufacturing has prepared the following flexible budget for October and it is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. 3 4 Material A Material B Direct labor Variances Flexible Budget Price/Rate Use/Efficiency $20,000 $1,000 F $3,000 U 30,000 500 U 1,500 F 40,000 500 U 2,500 F 5 LO 6 The most likely explanation of the above variances for Material A is that: Material A used during October was $2,000 less than expected 7 higher quality raw materials were used than were planned a lower price than expected was paid for Material A 8 O the company used a new supplier