Michiana Company's Benton Harbor Plant produces precast ingots for industrial use. Angelo Lorenzo, who was recently appointed general manager of the Benton Harbor Plant, has just been handed the plants contribution format income statement for October. The statement is shown below: Budgeted Actual $ 240,000 $240,000 Sales (8,000 ingots) Variable expenses Variable cost of goods sold* Variable selling expenses 94,000 112,470 10,000 104,000 136,000 10,000 122,470 117,530 Total variable expenses Contribution margin Fixed expenses 55,000 70,000 55,000 Manufacturing overhead Selling and administrative 70,000 125,000 $ 11,000 S (7,470) Total fixed expenses 125,000 Net operating income (loss) Contains direct materials, direct labor, and variable manufacturing overhead Mr. Lorenzo was shocked to see the loss for the month, particularly because sales were exactly as budgeted. He stated, "l sure hope the plant has a standard cost system in operation. If it doesn't, I won't have the slightest idea of where to start looking for the problem." The plant does use a standard cost system, with the following standard variable cost per ingot: Standard Quantity Standard Price Standard or Hours or Rate Direct materials Direct labor Variable manufacturing overhead Cost S 8.75 2.60 0.40 3.5 pounds 0.4 hours $2.50 per pound $6.50 per hour $2.00 per hour 0.2 hours Total standard variable cost $11.75 *Based on machine-hours During October the plant produced 8,000 ingots and incurred the following costs a. Purchased 33,000 pounds of materials at a cost of $2.95 per pound. There were no raw materials in inventory at the beginning of the month b. Used 27,800 pounds of materials in production. (Finished goods and work in process inventories are insignificant and can be ignored.) c. Worked 3,800 direct labor-hours at a cost of $6.20 per hour d. Incurred a total variable manufacturing overhead cost of $4,560 for the month. A total of 1,900 machine- hours was recorded It is the company's policy to close all variances to cost of goods sold on a monthly basis Required 1. Assume that the company recognizes price variances when materials are purchased. Compute the following variances for October: a. Direct materials price and quantity variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Materials price variance Materials quantity variance b. Direct labor rate and efficiency variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labor rate variance Labor efficiency variance c. Variable overhead rate and efficiency variances. (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variable overhead rate variance Variable overhead efficiency variance 2. Summarize the variances that you computed in (1) above by showing the net overall favorable or unfavorable variance for October. (Input all amounts as positive values. Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Net variance