Purchase of poor quality materials may cause an unfavorable materials price variance and an favorable labor efficiency variance.

True or False

A favorable labor rate variance can occur if workers with high hourly wage rates are assigned to work on products with standards that assume workers have low hourly wage rates.

True or False

Prester Corporation has budgeted production for next year as follows:

	Quarter
Budget	First	Second	Third	Fourth
Sales in units Production in units	60,000 70,000	70,000 80,000	80,000 90,000	90,000 100,000

Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. Budgeted purchases of material A for the second quarter would be:

145,000 pounds

140,000 pounds

180,000 pounds

165,000 pounds