ABC Corporation manufactures curtains. A certain window curtain requires the following: Direct materials standard is 10 square yards at $5 per yard. Direct manufacturing labor standard is 5 hours at $10 per hour.

During the second quarter, the company made 1,500 curtains and used 14,000 square yards of fabric costing $72,000. Direct labor totaled 7,600 hours for $83,600. What would be the net effect on the operating income as a result of both direct materials price variance and direct materials efficiency variance?

Group of answer choices

operating income will be decreased by $6,960

operating income will be increased by $6,960

operating income will be decreased by $3,040

operating income will be increased by $3,040