These variances are especially outstanding, given that the amounts are favorable and small. $($Santa Rosa$$s budgeted material and labor costs generally each average about $$350,000$ for similar periods.$)$ Additional data follow.

The company purchased and consumed $45,000$ pounds of direct materials at $$7\mathrm{.}70$ per pound, and paid $$16\mathrm{.}25$ per hour for $20,900$ direct$-$labor hours of activity. Total completed production amounted to $9,500$ units.

A review of the firm$$s standard cost records found that each completed unit requires $4\mathrm{.}2$ pounds of direct material at $$8\mathrm{.}80$ per pound and $2\mathrm{.}6$ direct$-$labor hours at $$14$ per hour.

Required:

$1.$ On the basis of the information contained in the performance report, should Santa Rosa be concerned about its variances?

$2-$a$.$ Calculate the company$$s direct$-$material variances.

$2-$b$.$ Calculate the company$$s direct$-$labor variances.

$3.$ On the basis of your answers to requirement $(2),$ should Santa Rosa be concerned about its variances?

$4.$ Are things going as smoothly as the vice president believes?

$5.$ Is it possible that some of the company$$s current problems lie outside Schmidt$$s area of responsibility?