ABC Dress Shop produces high quality formal dresses. In July2018 they produced 16,000 dresses. For the month of July thefollowing standard and actual cost data are available. The normalmonthly capacity of the company is 40,000 direct labor hours. Allmaterial purchased in July was used in July production.

	Standard per Dress	Actual
Direct materials	5.0 yards @ $8.50 per yard	$643,250 for 83,000 yards
Direct labor	2.0 hours @ $12.00 per hour	$425,000 for 34,000 hours
Overhead	hours @ $5.15 per hour (fixed $3.25; variable $1.90)	$125,000 fixed overhead $49,000 variable overhead

Overhead is applied on the basis of direct labor hours. Atnormal capacity, budgeted fixed overhead costs are $130,000 permonth and budgeted variable overhead costs are $76,000 permonth.

Variance	Standard	Actual	Variance	% Variance	>5%
Direct Materials Price	136000	124000	12000	8.82%	Yes	Investiage
Direct Materials Quantity	680000	705500	25500	3.75%	No
Direct Labor Rate	408000	425000	17000	4.17%	No
Direct Labor Efficiency	384000	408000	24000	6.25%	Yes	Investiage
Variable OverheadSpending	64600	49000	15600	24.15%	Yes	Investiage
Variable OverheadEfficiency	64600	63080	1520	2.35%	No
Fixed Overhead Spending	130000	125000	5000	3.85%	No
Fixed Overhead ProductionVolume	130000	110500	19500	15.00%	Yes	Investiage

QUESTION: Provide a discussion of thetradeoffs that might exist between the direct material and directlabor variances.