7. Rax Company has developed the following standards for one of its products:

Direct materials	12 pounds x 14 per pound
Direct labour	3 hours x 18 per hour
Variable overhead	3 hours x 8 per hour

The following activities occurred during the month of October:

Materials purchased	10,000 pounds at 13.60 per pound
Materials used	9,000 pounds
Units produced	800 units
Direct labour	2,500 hours at 19.00 per hour
Actual variable overhead	22,000

The company records materials price variances at the time of purchase.

Raxs materials usage variance would be

1. 8,400 unfavourable.

2. 8,400 favourable.

3. 5,600 unfavourable.

4. 5,600 favourable.