Mcphail Inc. has a standard cost system. The standards for direct materials for one of its products specify 6.6 grams of a particular input per unit of output at a standard cost of $7.40 per gram. The company has reported the following actual results for the product for September:
Required:
a. Compute the materials price variance for this input for September.
b. Compute the materials quantity variance for this input for September.
Definitions:
Strike Price
The fixed price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying asset.
Market Value
The total value of a company, measured through the market price of its outstanding shares.
Equity
The value of an asset after deducting the amount of liabilities or the ownership interest in a firm.
Call Contract
A financial contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other asset at a specified price within a specific time period.
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