Begin by determining the formula for the price variance, then compute the price variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) ( Actual price per input unit Standard price per input unit ) x Actual quantity of input = Price variance DM ( $ 1.25 1.40 ) X 1,360,000 = $ 204,000 F DL $ 14.50 14.00 ) X 4,400 $ 2,200 Next, determine the formula for the efficiency variance, then compute the efficiency variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) Actual quantity of input Standard quantity of input ) x Standard price per input unit = Efficiency variance DM ( 1,360,000 1,260,000 ) X $ 1.40 $ 140,000 DL 4,400 5,040 ) X $ 14.00 $ 8,960 F The favourable direct materials price variance combined with the unfavourable direct materials efficiency variance suggests that managers may have used lower-quality materials. The net effect is favourable The unfavourable direct labour price variance combined with the favourable direct labour efficiency variance suggests that managers may have used higher-paid workers who performed more efficiently. The net effect is favourablePremium Guard, which uses a standard cost accounting system. manufactured 210,000 boat fenders during the year, using 1,730,000 m of extruded vinyl purchased at $1.40 per metre. Production required 4,700 direct labour hours that cost $14.00 per hour. The materials standard was 8 m of vinyl per fender at a standard cost of $1.50 per metre. The labour standard was 0.026 direct labour hour per fender at a standard cost of $13.00 per hour. Compute the price and efciency variances for direct materials and direct labour. Does the pattern of variances suggest Premium Guard's managers have been making trade-offs? Explain. Begin by determining the formula for the price variance, then compute the price variances for direct materials (DM) and direct labour (DL). (Enter the results as positive numbers. Label each variance as favourable (F) or unfavourable (U).) ( . )x = Price variance