Requirements 1. Determine the direct materials price and quantity variances. Be sure to label each variance as favorable or unfavorable. 2. Think of a plausible explanation for the variances found in Requirement 1. 3. Determine the direct labor rate and efficiency variances. Be sure to label each unfavorable (U). Abbreviations used: DM = Direct materials.) Begin by determining the formula for the price variance, then compute the price variance for direct materials. variance as favorable or unfavorable. 4. Could the explanation for the labor variances be tied to the material variances? Explain. Determine the formula for the quantity variance, then compute the quantity variance for direct materials. Requirement 2 . Think of a plausible explanation for the variances found in Requirement 1. Begin wth the the direct labor rate variance. First determine the formula for the rate variance, then compute the rate variance for direct labor