Direct materials Direct labor incurred Budgeted price Flexible budget 60200 2150000*.03=64500 12650 1100*12=13200 60000 12000 Now compute the variances and label each amount as favorable (F) or unfavorable (U). The materials efficiency variance is The materials price variance is 4500 U 4300 F The labor efficiency variance is The labor price variance is 1200 U 550 F Requirement 2. Discuss some possible causes of the variances you have calculated. Can you make any possible connection between the material and labor variances? What recommendations do you have for future improvement? The materials price and efficiency variances could be an indication that the company purchased less expensive ingredients of higher quality, which resulted in fewer than the standard number of rejected units. The labor price variance suggests that less experienced workers may have worked more, resuting in a faster work pace and a lower than normal amount of rejects or waste. The company should determine the cause of the rejects. The cause could be underskilled workers. employees may be needed to properly schedule the work more efficiently. Perhaps increased wages will help. If rejects are not the problem,