Question
At Richetti, the standards price for the M640 electrical relay (a component used in the production of a commercial refrigeration unit) is $55. Standards call
At Richetti, the standards price for the M640 electrical relay (a component used in the production of a commercial refrigeration unit) is $55. Standards call for 3.0 relays per unit of finished product. In July, the company purchased 142 relays for $8,236. The company used 105 relays in the production of 50 refrigeration units (4 relays were damaged in the installation process).
Calculate the material price variance and the material quantity variance related to the M640 electrical relay. Indicated whether the variances are favorable or unfavorable.
Material Price Variance $____________________ Unfavorable or favorable
Material Quantity Variance $______________________ Unfavorable or favorable
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