The following data were compiled regarding actual performance: actual output units (chairs) produced, 2,800; square yards of input purchased and usec 5,200; price per square yard, $5.50; direct manulacturing labor costs, $9,964; actual hours of input, 940 ; labor price per hour, $10.60. Read the Requirement 1. Show computations of price and efficiency variancos for direct materials and direct manufacturing labor. Give a plausble explanation of why each variance occurred. Le's begin by determining the formula used to calculate the actual costs of direct materials, then enter the amounts in the formula and calculate the cost. Next wo will calculate the actual input at the budgeted prico, Requirements 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. 2. Suppose 7,600 square yards of materials were purchased (at $5.50 per square yard), even though only 5,200 square yards were used. Suppose further that variances are identified at their most timely control point; accordingly, direct materials price variances are isolated and traced at the time of purchase to the purchasing department rather than to the production department. Compute the price and efficiency variances under this approach. Requirement 1. Show computations of price and efficiency variances for direct materials and direct manufacturing labor. Give a plausible explanation of why each variance occurred. Let's begin by determining the formula used to calculate the actual costs of direct materials, then enter the amounts in the formula and calculate the cost. Next wo will calculate the actual input at the budgoted price. ifunm wnipune uve prove and oincency vanancos tor direct matenais and direct manufacturing labor. Label each variance as favorable (F) or unfavorable (U). Now compute the price and efficiency variances for direct materials and direct manufacturing labor. Label each variance as favorable (F) or unfavorable (U) Now give a plausible explanation of why each variance occurred. Begin with the direct material variances. The matecials price variance: The materials efficiency variance: The production manager may have employed workers or the budgoted matorials standards were sot too The labor price variance: in labor ratos due to a The labor afficiency varitance. officient workers being omployed or the use of quality materials