Exeter Has a Material Standard of 1 Pound Per Unit

question 71

Multiple Choice

Exeter has a material standard of 1 pound per unit of output. Each pound has a standard price of $26 per pound. During July, Exeter paid $66,100 for 2,475 pounds, which it used to produce 2,350 units. What is the direct materials price variance?

• A) $1,750 unfavorable
• B) $1,300 favorable
• C) $6,300 unfavorable
• D) $5,000 unfavorable

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Definitions:

Formalization

The extent to which an organization's policies, procedures, job descriptions, and rules are written and explicitly articulated.

Creativity

The ability to produce original and valuable ideas or solutions.

Centralization

The degree to which decisions are made at the top of the organization.

Simple Structure

A centralized form of organization that emphasizes a small technical and support staff, strong centralization of decision-making in the upper echelon, and a minimal middle level.