Kelton Corp. has calculated its direct materials price and quantity variances to be $500 favorable and $800

Question:

Kelton Corp. has calculated its direct materials price and quantity variances to be $500 favorable and $800 unfavorable, respectively. Kelton’s production manager believes that these variances indicate that the purchasing department is doing a good job but production is doing a poor job.
Explain whether the production manager’s conclusions are correct.