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At Penny Worth, the standard price for the M640 electrical relay (a component used in the production of a commercial refrigeration unit) is $61. Standards call for 2 relays per unit of finished product. In July, the company purchased 156 relays for $8,580. The company used 109 relays in the production of 46 refrigeration units (4 relays were damaged in the installation process).
Problem 1: Calculate the material price variance and the material quantity variance related to the M640 electrical relay.
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