Smitty Company makes a product called "S".The standard cost card for one unit of "S" follows:

Direct Material2 kgs. @ 10/kg.$20

Direct Labour3 hours @ $20/hr.$90

Total DM and DL$110per unit

Budgeted production in the period200 units

Actual results in the period:

Actual units produced110 units

Direct Material250 kgs. used$3,000 total

Direct Labour320hours$6,720 total

Required:

1. Calculate the direct materials price variance and the direct materials efficiency/quantity variance. And Indicate if each variance isFavourable orUnfavourable.Show all your work.
2. Calculate the direct labour price variance and the direct labour efficiency variance.Identify if each variance isFavourable orUnfavourable.Show your work.
3. The boss was really happy because the total actual costs for materials and labour were lower than budgeted costs (i.e. $22,000).How would you respond to the boss.Be as brief as possible.