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The standards for product K17 call for 5.0 meters of a raw material that costs $19.10 per meter. Last month, 2,700 meters of the raw material were purchased for $51,435. The actual output of the month was 460 units of product K17. A total of 2,500 meters of the raw material were used to produce this output.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
I can be almost as accurate, at virtually no cost, using the random walk model to forecast earnings." What is the random walk model? Do you agree or disagree with John Right's forecast strategy? Why or why not?
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