6. a. What effect, if any, would you expect poor-quality materials to have on direct labor variances? b. Suppose, all of the workers are contractual in your factory. Therefore, there is no question about the labor cost fluctuation. Would you still expect a labor rate variance in the result? c. Denovans Inc., produces different agricultural chemical solutions. One mixture, called Blurex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Blurex, as follows: Standard Standard Price Quantity or Rate Direct materials 3 ounces $5.50 per ounce Direct labor 0.5 hours $10.50 per hour Variable Manufacturing Overhead 0.5 hours $3.50 per hour During November, the following activity was recorded related to the production of Blurex: a. Materials purchased, 8,700 ounces at a cost of $49,590. b. There was no beginning inventory of materials; however, at the end of the month, 2,500 ounces of material remained in ending inventory. c. The company employs 23 lab technicians to work on the production of Blurex. During November, they each worked an average of 40 hours at an average pay rate of $10.70 per hour. d. Variable manufacturing overhead is assigned to Blurex on the basis of direct labor- hours. Variable manufacturing overhead costs during November totaled $3,680. e. During November, 2,200 good units of Blurex were produced. Required: i. For direct materials, compute the price and quantity variances ii. For direct labor, compute the rate and efficiency variances. iii. Compute the variable overhead rate and efficiency variances. What relation can you see between this efficiency variance and the labor efficiency variance? iv. Prepare a brief explanation of the possible causes of each variance. Page 7 of 7