During the month of July, SETCO experienced a sharp, unexpected decline in the cost of one of its direct materials. The firm significantly increased its level of production because it was able to lower its selling price and sell more products. If SETCO uses a standard cost system properly, what would be the effect of the decrease in raw material price and the increase in the level of production on SETCO's material variances?

Material Price

Variance

A$)$ Favorable

B$)$ Favorable

C$)$ Favorable

D$)$ Unfavorable

Material Quantity

Variance

Unaffected

Favorable

Unfavorable

Unfavorable