Bobcat Shoes uses standard costing and has provided you with the following information regarding the materials and labor required to produce hiking boots and casual sandals:

Standard direct materials per unit 4 oz. Standard direct labor hours per unit 1.5 hours Standard direct materials price $5 per oz. Standard direct labor rate $6 per hour Production (in finished or equivalent units) 2,000 units Actual direct labor hours 2,200 hrs Actual direct labor cost $23,490 Actual direct materials used 7,800 oz. Units sold 1,400 units Direct materials purchased 8,000 oz. Cost of direct materials purchased $34,000

1. Calculate the direct material and direct labor price and efficiency variances (8 pts.) 2. Suggest two possible causes for the largest variance in question 1. For each cause you identify, describe an appropriate action that managers should take. (4 pts.) 3. List two factors that managers should consider when deciding whether to further investigate these types of variances.