Actual:

Units 1000

Direct material purchased 13 000 kilograms @ $1.6 per kilogram

Direct material used 10 000 kilograms

Direct labour 2 000 hours @ $20 per hour

Standards:

Direct material 11 kilograms @ $1.5 per kilogram

Direct labour hours 2.5 hours @ $15 per hour

What is the total variance for this example? Is it favourable or unfavourable? Discuss the trade-off between variances.