Problem #$10$: Processing Costing

UMPI's Potatoes produces ready$-$to$-$eat mashed potatoes for resale at food stores. UMPI expected to use $0\mathrm{.}40$ direct labor hours to

produce one unit $($batch$)$ of product at a cost of $$7\mathrm{.}50$ per hour. Actual results are in for the last year, which indicates $55,000$

batches of mashed potatoes were sold. The company's direct labor workforce worked $26,400$ hours at $$6\mathrm{.}50$ per hour.

$1)$ Calculate the labor rate variance. Indicate if it is favorable or unfavorable to the company.

$2)$ Calculate the labor efficiency variance. Indicate if it is favorable or unfavorable to the company.

$3)$ Provide a logical reasoning for the materials price and quantity variances calculated in $1$ and $2.$