Please answer questions 2 and 3.

Please answer questions 2 and 3.

Problem 8-18B Comprehensive Variance Analysis [LO8-4, LO8-5, LO8-6] 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 plant's 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 Total variable expenses 94,000 10,000 112,470 10,000 104,000 122,470 Contribution margin 136,000 117,530 55,000 70,000 55,000 70,000 Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses Net operating income (loss) 125,000 125,000 $ 11,000 $ 7,470) 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, "I 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 Cost Direct materials 3.5 pounds $2.50 per pound $ 8.75 Direct labor 0.4 hours $6.50 per hour 2.60 Variable manufacturing overhead 0.2 hours $2.00 per hour 0.40 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. 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 (1.e., zoro variance.) Answer is complete but not entirely correct. Variable overhead rate variance Variable overhead efficiency variance 760 $300 U 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 "Nono" for no effect (le, zero variance.) Answer is complete but not entirely correct. Net variance $ 10,170 3. Pick out the two most significant variances that you computed in (1) above, (Select all that apply.) Answer is not complete. Materials price variance Materials quantity variance Variable overhead officiency variance Labor rate variance Variable overhead rate variance Labor efficiency variance Problem 8-18B Comprehensive Variance Analysis [LO8-4, LO8-5, LO8-6] 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 plant's 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 Total variable expenses 94,000 10,000 112,470 10,000 104,000 122,470 Contribution margin 136,000 117,530 55,000 70,000 55,000 70,000 Fixed expenses: Manufacturing overhead Selling and administrative Total fixed expenses Net operating income (loss) 125,000 125,000 $ 11,000 $ 7,470) 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, "I 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 Cost Direct materials 3.5 pounds $2.50 per pound $ 8.75 Direct labor 0.4 hours $6.50 per hour 2.60 Variable manufacturing overhead 0.2 hours $2.00 per hour 0.40 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. 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 (1.e., zoro variance.) Answer is complete but not entirely correct. Variable overhead rate variance Variable overhead efficiency variance 760 $300 U 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 "Nono" for no effect (le, zero variance.) Answer is complete but not entirely correct. Net variance $ 10,170 3. Pick out the two most significant variances that you computed in (1) above, (Select all that apply.) Answer is not complete. Materials price variance Materials quantity variance Variable overhead officiency variance Labor rate variance Variable overhead rate variance Labor efficiency variance