Please answer requirement 2.

% E7-25 (final answer) :3 Question Help Damico, Inc. is a privately held furniture manufacturer. For August 2014, Damico had the following standards for one of its products, a wicker chair: Direct materials Direct manufacturing labor Standards per Chair 2 square yards of input at $ 5.80 per square yard 0.5 hour of input at $ 10.90 per hour The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,200, square yards of input purchased and used, 4,000; price per square yard, $6.00; direct manufacturing labor costs, $10,260; actual hours of input, 950; labor price per hour, $10.80. Read the requirements. Begin by computing the price and efficiency variances for direct materials, then compute the price and efficiency variances for direct manufacturing labor. (Label each variance as favorable (F) or unfavorable (U.) May 2014 Direct materials Direct manufacturing labor Actual Price results Variance 24,000 $ 800 10,260 $ 95 Actual qty x Efficiency Budgeted price Variance $ 23,200 $ 23,200 $ 2320 F 2,320 F $ 10,355 $ 1,635 F Flexible budget 25,520 11,990 $ $ U F $ $ Now give a plausible explanation of why each variance occurred. Begin with the direct material variances. The materials price variance: There was an unexpected increase in materials price per square yard due to decreased competition. The materials efficiency variance: The production manager may have employed higher-skilled workers or the budgeted materials standards were set too loosely Enter any number in the edit fields and then click Check Answer. A Requirements 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. 2. Suppose 6,300 square yards of materials were purchased (at $6.00 per square yard), even though only 4,000 square yards were used. Suppose further that variances are identified at their most timely control point, accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. Compute the price and efficiency variances under this approach. Print Done