Dunn, Inc. is a privately held furniture manufacturer. For August 2017, Dunn had the following standards for one of its products, a wicker chair E: (Click the icon to view the standards per chair.) The following data were compiled regarding actual performance actual output units (chairs) produced, 2,900; square yards of input purchased and used, 5,500; price per square yard, $5.20; direct manufacturing labor costs, $10,682; actual hours of input, 980; labor price per hour, 510.90. Read the requirements. Requirement 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. Let's begin by determining the formula used to calculate the actual costs of direct materials, then enter the amounts in the formula and calculate the cost. Actual price Actual input Actual cost Direct materials 5.2 5,500 28,600 Next we will calculate the actual input at the budgeted price Actual input Cost Budgeted price 5 5 $ 27,500 Direct materials Direct manufacturing labor 5,500 980 10.7 $ 10.486 Determine the formula and calculate the costs for the flexible budget. Budgeted price Budgeted input for actual output x 5,800 = Flexible budget cost $ 29,000 5 Direct materials Direct manufacturing labor 1,450 10.7 $ 15,515 Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable (F) or unfavorable (U). Price Efficiency variances variances Direct materials Direct manufacturing labor Direct materials Direct manufacturing labor Standards per Chair 2 square yards of input at $ 5.00 per square yard 0.5 hour of input at $ 10.70 per hour