During the week, McCain’s french fry manufacturing facility purchased 10,000 kilograms of potatoes (transferred from its potato farming operations) at a price of $1.10 per kilogram. The standard price per kilogram is $1.05. During the week, 9,760 kg of potatoes were used. The standard quantity of potatoes that should have been used for the actual volume of output was 9,700 kg. Record the following transactions using a standard cost accounting system:
1. The purchase of potatoes
2. The use of potatoes
Are the variances favourable or unfavourable? Explain.