Question $4(10$ marks$)$

Chaten Company manufactures bags of fertilizer that have the following unit standard costs for direct

materials and direct labor:

The following activities were recorded for October:

$1,000$ bags were manufactured.

$95,000lbs.$ of materials costing $$76,000$ were purchased.

$,102,500lbs.$ of materials were used.

$$12,000$ was paid for $475$ hours of direct labor.

There were no beginning or ending work$-$in$-$process inventories.

Required:

A$.$ Compute the direct materials variances and indicate each of them is favorable $($F$)$ or unfavorable

$($U$).$

B$.$ Compute the direct labor variances and indicate each of them is favorable $(F)$ or unfavorable $($U$).$

C$.$ Give possible reasons for the occurrence of the materials usage variance for this company.