Problem 2 (15 points) It is nice to see that small variance on the income statement after all the trouble we've had lately in controlling Manufacturing costs," says Mary Winston, vice president of East Company, "The overall manufacturing variance reported lase period is well below the limit we have set for variances. We need to congratulate everybody on a job well done. The company produces and sells a single product. The standard costs per unit of the product follow: $14.00 $18.00 $3.00 Direct materials, 4 yards at $3.50 per yard Direct labor, 15 direct labor-hours at $12.00 per direct labor-hour Variable overhead, 15 direct labor-hours at $2.00 per direct labor-hour Fixed overhead, 1.5 direct labor-hours at $6 per direct labor-hour Standard cost per unit $9.00 $44.00 The following additional information is available for the year just completed: -The company manufactured 20,000 units of product during the year. A total of 78,000 yards of material was purchased during the year at a cost of $3.75 per yard. All of this material was used to manufacture the 20,000 units. There were no beginning or ending inventories for the year. -The company worked 32.500 direct labor-hours during the year at a cost of $11.80 per hour. -Overhead cost is applied to products on the basis of standard direct labor-hours. Data relating to manufacturing overhead costs follows: Direct labor-hours Budgeted fixed overhead costs Actual fixed overhead costs Actual variable overhead costs 25,000 $150,000 S148.000 $68,250 Compute the following variances for the year, and indicate whether cach is favorable or unfavorable. a. Direct materials price and efficiency variances. (5) b. Direct labor price and efficiency variances. (5) c. Explain briefly the possible causes of the DL efficiency variance