The following standard costs were developed for one of the products of CH Industries:

STANDARD COST CARD

PER UNIT

Direct materials: 6 meters at $2 per meter $12.00

Direct labor : 5 hours at $3 per hour $15.00

The following were actual information regarding the company's operations for the period:

Units produced 20,000 units

Materials purchased 130,000 meters at $2.05 per meter

Materials used 110,000 meters

Direct labor 115,000 hours at $3.10 per hour

A. Calculate the materials price variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant. (2 marks)

B. Calculate the materials usage variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant.

C. Calculate the labor rate variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant.

D. Calculate the labor efficiency variance and indicate whether it is favorable or unfavorable. Determine whether the cost variance is significant.

E. Identify one possible cause for each of the significant cost variances and recommend appropriate corrective actions. (5 marks)