The Donovan Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, Donovan's purchased and used 96,000 pounds of potatoes at a price of $0.65 per pound. During the week, 2,300 direct labor hours were incurred in the plant at a rate of $12.45 per hour. The standard price per pound of potatoes is $0.85, and the standard direct labor rate is $12.30 per hour. Standards indicate that for the number of bags of frozen fries produced, the factory should have used 92,000 pounds of potatoes and 2,000 hours of direct labor. Read the requirements. Requirement 1. Determine the direct material price and quantity variances. Be sure to label each variance as favorable or unfavorable. (Enter the variances as positive numbers. Enter currency amounts to the nearest cent and your answers to the nearest whole dollar. Label the variances as favorable (F) or unfavorable (U). Abbreviations used: DM = Direct materials.) Begin by determining the formula for the price variance, then compute the price variance for direct materials. Actual quantity purchased 96,000 xl x( $ Standard price 0.85 Actual price 0.65 ) = DM price variance ) = $ 19,200 F - $ Determine the formula for the quantity variance, then compute the quantity variance for direct materials. Standard price x( Standard quantity allowed - Actual quantity used ) = D .85 x DM quantity variance