Select the largest direct material flexible budget variance and the direct labor flexible budget variance from the contribution report. Include the following three items for each of the variances:

1. Indicate whether each is favorable or unfavorable

2. Calculations

3. You should also support the variance with the formula showing why the variance exists.

Outline the possible cause for each price and efficiency variance

CONTRIBUTION REPORT Flexible Budget Variance Actual Flexible Budget Amount FIU 217,000 5,989 200 217,000 5,989.200 4,340 F 592,410 22,785 No. of Tie Dyed T-Shirts Sold Sales Revenue Direct Materials: White T-Shirts Rubber Bands Plastic Drying Bags Direct Labor Variable Overhead Total Variable Costs Contribution Margin 596,750 17,360 32,550 U 5,425 6,510 39,060 U 1,085,000 781,200 303,800 U 78,120 U 781,200 2,520,455 703,080 2,130,940 U 389,515 389,515 3,468,745 3,858,260 Following is the company's June contribution report, comparing budgeted and actual results for its tie-dyed t-shirt Actual Master Budget No. of Tie Dyed T-Shirts Sold 217,000 Shirts 215,000 Shirts $5,989,200 $ 5,934,000 Sales Revenue Direct Materials: White T-Shirts Rubber Bands Plastic Drying Bags Direct Labor Variable Overhead Total Variable Costs Contribution Margin 592,410 22,785 39,060 1,085,000 781,200 $ 2,520,455 $3,468,745 591,250 17,200 32,250 774,000 696,600 $ 2,111,300 $ 3,822,700 Standard costs for one tie dyed t-shirt are as follows: White T-Shirts 1.00 shirt at $2.75 per shirt Rubber Bands 4.00 bands at $0.02 per band Plastic Drying Bags 1.00 bags at $0.15 per bag Direct Labor 18 minutes per shirt at $12.00 per hour Variable Overhead 18 minutes per shirt at $0.18 per direct labor minute Variable Overhead is applied on the basis of direct labor hours Accounting and production records indicate that the company purchased and used the following total quantities during the month, to produce 217,000 tie dyed t-shirts: White T-Shirts 227,850 white t-shirts Rubber Bands 1,519,000 bands Plastic Drying Bags 195,300 bags Direct Labor 4,340,000 minutes