Considering the following data manufacturing company:
Direct Direct
Materials Labor
Actual price per unit of input (lb and hr) $7.80 $12.00
Standard price per unit of input $7.00 $12.75
Standard inouts allowed per unit of output 10 2
Actual units of input 115,000 30,000
Actual units of output (product) 14,400 14,400
Question 1. Compute the price, quantity, and flexible-budget variances for direct materials and direct labor. Use U or F to indicate whether the variances are unfavorable of favorable.
Question 2. Prepare a plausible explanation for the performance.