Evan Farms manufactures the bags of frozen french fries used at many restaurants. Last week, Evan Farms purchased (transferred in from its potato farms) and used 99,000 kg of potatoes at a price of $0.70 per kilogram. During the week, 1,700 direct labour hours were incurred in the plant at a rate of $12.20 per hour. The standard price per kilogram of potatoes is $0.80, and the standard direct labour rate is $11.90 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 95,000 kg of potatoes and 1,600 hours of direct labour. Requirements 1. Determine the direct materials price and efficiency variances. Be sure to label each variance as favourable or unfavourable. 2. Think of a plausible explanation for the variances found in Requirement 1. 3. Determine the direct labour price and efficiency variances. Be sure to label each variance as favourable or unfavourable. 4. Could the explanation for the labour variances be tied to the material variances? Explain. Requirement 1. Determine the direct materials price and efficiency variances. Be sure to label each variance as favourable or unfavourable. (Enter the results as positive numbers.) Direct Materials Price Variance Direct Materials Efficiency Variance 9900 F 3200U Requirement 2. Think of a plausible explanation for the variances found in Requirement 1. One plausible explanation is that Evan Farms bought lower grade potatoes at a cheaper price, which resulted in the favourable price variance. However, because the potatoes were lower grade, some of the potatoes were bad and could not be used in production. As a result, the manufacturing facility had to use more potatoes than standards allow. This accounts for the unfavourable efficiency variance. Requirement 3. Determine the direct labour price and efficiency variances. Be sure to label each variance as favourable or unfavourable. (Enter the results as positive numbers.) Direct Labour Price Variance Direct Labour Efficiency Variance 510|| U 1190 U Requirement 4. Could the explanation for the labour variances be tied to the material variances? Explain. The unfavourable labour price and efficiency variances could be tied to the material variances. For example, if the material variances were the result of purchasing lower grade potatoes, then the factory would use more labour in sorting the potatoes. As a result, it would have had to pay workers an overtime premium