The company "Carpinteros Inc." produces oversized library shelves. The budget contains the following information:

Estimated production for the period - 12 units.

STANDARD COST CARD FOR LIBRARY RACKS

Cost Element

Estimated Quantity for Each Unit Produced

Price by unit

Cost per unit produced

Direct materials

8 pieces

$ 10.00

$ 80.00

Direct Labor

40 hours

$ 6.00

$ 240.00

Indirect manufacturing costs

40

$ 0.75

$ 30.00

Total Standard Cost per unit

$ 350.00

Operations of the month:

Purchase of 148 pieces of direct materials for $ 11.00 each piece for a total of $ 1,628.00

Materials Used - 140 pieces

Labor employed in manufacturing - 714 at $ 6.50 per hour for a total of $ 4,641.00

Indirect Manufacturing Cost - $ 406.00

Production: 14 units finished

Instructions

Carefully read the following above.

Prepare variance analysis between standard costs and actual costs.

Classify the variations between favorable and unfavorable.

Mention the reasons for the variations.

Mention the impact that the variations found could have on the operation of the company.