The following five unrelated situations affect one or more standard cost variances for materials, labor (assembly), and overhead:
1. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement, the price will be increased by 15 percent above the current standard price of $100 per unit. As a result of the improved design, we expect the number of defective components to decrease by 80 units per month. On average, 1,200 units of the component are purchased each month. Defective units are identified prior to use and are not returnable.
2. In an effort to meet a deadline on a rush order in Department A, the plant manager reassigned several higher-skilled workers from Department B, for a total of 300 labor hours. The average salary of the Department B workers was $2.05 more than the standard $7.25 per hour rate of the Department A workers. Since they were not accustomed to the work, the average Department B worker was able to produce only 36 units per hour instead of the standard 48 units per hour. (Consider only the effect on Department A labor variances.)
For each of the preceding situations, determine which standard cost variance(s) will be affected, and compute the amount of the effect for one month on each variance. Indicate whether the effect is favorable or unfavorable. Assume that the standards are not changed in response to these situations. (Round calculations to two decimal places.