EXERCISE 8-10 Material and Labor Variances (LO2, LO3) Topper Toys has developed a new toy called the Brainbuster. The company has a standard cost system to help control costs and has established the following standards for the Brainbuster toy: Direct materials: 8 diodes per toy at $0.30 per diode Direct labor: 1.2 hours per toy at $7 per hour During August, the company produced 5,000 Brainbuster toys. Production data on the toy for August follow: a Direct materials: 70,000 diodes were purchased for use in production at a cost of $0.28 per diode. Some 20,000 of these diodes were still in inventory at the end of the month. b. Direct labor: 6,400 direct labor-hours were worked at a cost of $48,000. Required: 1. Compute the following variances for August: a. Direct materials price and quantity variances. b. Direct labor rate and efficiency variances. 2. Prepare a brief explanation of the significance and possible causes of each variance