The following standards have been established for a raw material used to make product O84: 
The following data pertain to a recent month's operations: 
The direct materials purchases variance is computed when the materials are purchased.
Required:
a.What is the materials price variance for the month?
b.What is the materials quantity variance for the month?
Definitions:
Contract Rate
The predetermined fee or rate agreed upon in a contract for services rendered or goods sold.
Bonds
Long-term debt securities issued by corporations or governments to raise capital, paying interest to holders.
Premium
A term that records the sale of stock at more than par value. In this book we use the account Paid-In Capital in Excess of Par to record the premium received.
Discount
A reduction in the price of goods or services, often used as a sales promotion or to encourage early payment.
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