Problem 5 - Direct Cost Variances Granola Fashions began production of a new product on April 1. The company uses a standard cost system and has established the following standards for one unit of the new product: Standard Quantity Standard Price or Standard Cost or Hours Rate 3.5 yards $16 per yard $35.00 Direct materials Direct labor 2.6 hours $10 per hour $12.80 During June, the following activity was recorded for the new product: a. Purchasing acquired 10,000 yards of material at a cost of $13.80 per yard. b. Production used 8,000 yards of the material to manufacture 3,000 units of the new product. C. Production reported that 5,000 direct labor-hours were worked on the new product at a cost of $43,000. Required: 1. For direct materials: a. Compute the materials price and quantity variances. b. Prepare journal entries to record the purchase of materials and the use of materials in production. 2. For direct labor: a. Compute the labor rate and efficiency variances. b. Prepare a journal entry to record the incurrence of direct labor cost for the month