Clear Creek Backpack produces high quality multi-compartment backpacks with a padded sleeve for laptops. The new general manager at the Teton plant is reviewing the plant's contribution margin format income statement for March. The statement is shown below: Sales (5,000 backpacks) Total variable expenses Total contribution margin Total fixed expenses Budget Actual $250,000 $250,000 $100,000 $116,390 $150,000 $133,610 Net operating income (loss) $135,000 $135,000 $ 15,000 $ (1,390) The general manager is surprised to see the loss for the month, particularly because sales were exactly as budgeted. The plant uses a standard cost system with the following standard variable cost per backpack: Direct materials Direct labor Variable overhead 4.0 meters @ $2.50 per meter .6 hours @ $9.00 per labor hour 3 hours @ $2.00 per machine hour The plant uses a standard cost system with the following standard variable cost per backpack: Direct materials Direct labor Variable overhead 4.0 meters @ $2.50 per meter 6 hours @ $9.00 per labor hour 3 hours @ $2.00 per machine hour During March, the plant produced 5,000 backpacks and incurred the following costs: a. They purchased 25,000 meters of material at a cost of $2.95 per meter. There was no beginning material inventory. b. They used 19,800 meters of material in production. c. Employees worked 3,600 direct-labor hours at a cost of $8.70 per hour d. 1. Compute all material and labor variances using the equation method. Be sure to show all calculations and name all variances. 2. Summarize the variances that were computed in part 1 by showing each variance and the net overall favorable or unfavorable variance for March. 3. What are the two (2) most significant variances that you computed in part 1? Give two (2) reasons for each of the significant variances. The standards are set correctly and there are not any errors in the standards