Refer to the data in the preceding exercise. Use diagrams similar to those in Exhibits (a) and (b) to determine the direct-material and direct-labor variances. Indicate whether each variance is favorable or unfavorable.

(a)

(b)

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Actual Labor Cost Standard Labor Cost Actual Standard Standard Hours Rate Hours x Rate $20 hour x 980 hoursX used $21 x per hour 980 hours X used $20 per hour 1,000 hoUrs allowed 20,580 $19,600 $20,000 $980 Unavorabla $400 Faworabie Direct-labor rate varlance Direct-labor efficiency variance $580 Unfavorable Direct-labor variance Actual output x Standard hours per unit 2,000 units x 5 hour per unit-1,000 hours allowed