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Problem - At Pembina, the standard price for the M640 electrical relay (a component used in the production of a commercial refrigeration unit) is $59. Standards call for 2.0 relays per unit of finished product. In July, the company purchased 139 relays for $8,062. The company used 101 relays in the production of 54 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. Indicate whether the variances are favorable or unfavorable.
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