Manchester Corp. uses a standard cost system. For the most recent fiscal year, the company produced 40,000 units of product. Certain company managers are evaluated in part by their performance in relation to standards. To this end, the company separates the following four variances:

• Direct materials: Price variance and Quantity (Usage) variance
• Direct labour: Rate variance and Efficiency variance
• The standard direct materials cost per unit of product is $15. This standard is based on 1.5 (one and one half) kgs of raw material. The standard direct labour cost per unit of product is $30. This standard allows for 2 (two) direct labour hours per unit.
• During the past year, the company purchased 40,000 kgs of raw material at a total cost of $600,000 and used 70,000 kgs in production. The company actually paid $1,400,000 in direct labour costs for the year at an average wage rate of $20 per direct labour hour.
• Required: Indicate your response to each of the following questions by circling the appropriate letter. 1. Attainable standard costs can best be described as standards that a. are designed to reflect expected outcome b. can only be attained if estimated production in units is equal to the appropriate letter

1. From the above data, the Materials Price variance was:

• $350,000 unfavourable
• No variance
• $200,000 unfavorable
• $100,000 unfavorable

2. From the above data, the Labour Efficiency variance was:

• $120,000 unfavourable
• $150,000 favourable
• $120,000 favourable
• $100,000 unfavourable