Variance Analysis Problem Avatar, Inc. has prepared the following standard cost sheet for one unit of the product. Direct materials (5 pounds at $3 per pound) Direct labor (2 hours at $13.00 per hour) $15.00 $26.00 During the month of November, the company manufactures 450 units and incurs the following actual costs. Direct materials purchased and used (2,000 pounds) Direct labor (1,000 hours) $8,000 $12,000 1. Compute the total, price, and quantity variances for materials and labor. Direct Material Variances Total Direct Material Variance Direct Material Price Variance (SQ SP) = Total Favorable or Unfavorable (AQXAP) $8,000 (AQ x AP) (AQ X SP) Total Favorable or Unfavorable (AQx SP) (SQ X SP) = Total Favorable or Unfavorable Direct Material Quantity Variance Direct Labor Variances (AH AR) (SH SR) = Total Favorable or Unfavorable Total Direct Labor Variance (AH AR) (AH SR) Total Favorable or Unfavorable Direct Labor Price (Rate) Variance (AH SR) (SH SR) = Total Favorable or Unfavorable Direct Labor Quantity Variance