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Cayman Designs makes chair cushions. The standard direct materials quantity is 1 kilogram per cushion at a cost of $2.50 per kilogram. The actual results for the production of 20,000 cushions was 1.25 kilograms per cushion, at a cost of $2.40 per kilogram.
Problem 1: Calculate the direct materials input rate variance and the direct materials efficiency variance.
Problem 2: What would you do differently if you were the sourcing manager here?
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