Maxwell Co

question 168

Essay

Maxwell Co. collected the following information about its production activities for the current year.
a. Compute the direct materials price and quantity variances and indicate whether each is favorable or unfavorable.
b. Prepare the journal entry to record the issuance of direct materials into production.
Actual costs and quantities:
Direct materials used 95,000 lbs. @ $6.30 per lb.
Units completed during the year, 50,000 units
Standard costs and quantities:
Price per lb. of direct material, $6.05
Two lbs. of direct material per unit

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Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and profits or losses over a specific period of time.

Unusual In Nature

Events or transactions that are not typical of the normal activities of the entity and thus not expected to recur frequently or regularly.

Pro Forma Earnings

Financial results excluding one-time events to give investors an idea of a company's normal earnings potential.

Basic EPS

Basic Earnings Per Share, a calculation that shows how much earnings are available to common stockholders, on a per-share basis.