Problem:
Natural company produces organic twig brooms. Each broom calls for 1 pound of wood, the wood should cost $0.25 per pound. In July, the division manufactured and sold 500,000 brooms. During the month, it used 495,000 pounds of wood, and the total cost of the material was $128,700. Normal monthly capacity was set at 580,000 brooms.
Required:
Question 1: Calculate Natural's material price and quantity variances for wood for the month.
Note: Be sure to show how you arrived at your answer.