Exercise 8-15 Direct materials and direct labor variances LO P2 The following information describes production activities of Mercer Manufacturing for the year. Actual direct materials used 20,000 lbs. at $4.25 per lb. Actual direct labor used 7,265 hours for a total of $140,941 Actual units produced 42,030 Budgeted standards for each unit produced are 0.50 pounds of direct material at $4.20 per pound and 10 minutes of direct labor at $20.40 per hour. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate (1) Compute the direct materials price and quantity variances. (2) Compute the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.