Interpreting the variances is a key part of managerial accounting. For each scenario described below, indicate whether the result would be favorable or unfavorable. Scenario The production manager finds a new supplier of direct materials. Its prices are 30% less than the current supplier. Is the effect on the direct materials price variance favorable or unfavorable? The standard direct materials quantity per product is 2 units. In training new personnel, additional material is often b. wasted. For his first two-week period, a new employee used 3 units per product. Is the direct materials quantity variance favorable or unfavorable? A new collective bargaining agreement among union employees guarantees a wage increase of 5%. What would the effect on the direct labor rate variance be? A new hiring manager prioritizes experience over cost when hiring employees. As a result, the experienced hires produce goods more efficiently than inexperienced counterparts. What effect does this have on the direct labor efficiency variance? |e. Consider the same facts as above. What effect do you think this would have on the direct labor rate variance? Now consider each scenario with sustainability metrics in mind. How might the answers change? Scenario The production manager finds a new supplier of direct materials. Its prices are 30% less than the current supplier, but those price decreases come with 40% additional environmental cost in shipping from abroad) and an indirect labor cost of 40% (because workers abroad are not compensated at what the company deems a fair wage). Is the effect on the direct materials price variance with sustainability in mindlikely favorable or unfavorable? g. The standard direct materials quantity per product is 2 units. In training new personnel, additional material is often wasted. For his first two-week period, a new employee used 3 units per product. Such learning is encouraged by the managerial accountant because it results in long-term efficiency. Is the direct materials quantity variance favorable or unfavorable from a sustainability perspective? A new collective bargaining agreement between union employees gu etween union employees guarantees a wage increase of 5%. The company's h. goal is to pay what it deems "livable wages" to 100% of its employees by 20x0, and this change moves it closer to that goal. What would the effect on the direct labor rate variance be with sustainability metrics in mind? A new hiring manager prioritizes experience over cost when hiring emplovees. As a res tly than inexperienced counterparts and produce less waste. What effect does this have on the direct labor efficiency variance from a sustainability perspective? Consider the same facts as above. What effect do you think this would have on the direct labor rate variance? (Assume this company's goal is to pay 100% of its employees a "livable wage by 20x0, and this change moves it closer to the goal.)