The following information was taken from the records of Liberty Manufacturing Company for the month of July:

Materials (actual):

Purchases of material B: $\quad 750$ pounds $\times \$ 2.50$

Used 900 pounds of material A Used 525 pounds of material B Direct labor (actual):

Manufacturing:

Assembly: $\square$

1,050 hours $\times \$ 8.90$

450 hours $\times \$ 4.50$

Standard cost per unit:

Material A: 2 pounds $\times \$ 5.20$ per pound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $\$ 10.40$

Material B: 1 pound $\times \$ 2.60$ per pound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.60 Direct labor-assembly: 1 hour $\times \$ 4.60$. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.60 Standard cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $\$ 34.60$

Units produced: 500 Required:

Materials and Labor Variance Analysis 1. Calculate the materials price and quantity variances, assuming that the materials price variance is recognized at the time of purchase.

2. Calculate the labor rate and labor efficiency variances. -

3. Interpretive Question: What is the advantage, if any, of calculating the materials price variance at the time of purchase rather than at the time of use?