Miguez Corporation Makes a Product with the Following Standard Costs

question 36

Multiple Choice

Miguez Corporation makes a product with the following standard costs: The company budgeted for production of 2,600 units in September, but actual production was 2,500 units. The company used 5,440 liters of direct material and 1,680 direct labor-hours to produce this output. The company purchased 5,800 liters of the direct material at $7.20 per liter. The actual direct labor rate was $24.10 per hour and the actual variable overhead rate was $1.90 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for September is:

• A) $2,170 U
• B) $2,232 U
• C) $2,170 F
• D) $2,232 F

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Definitions:

Sample Mean

The average of a subset of numbers from a larger set, representing the central tendency of that subset.

Consistent Estimator

An estimator that, as the sample size increases, converges in probability to the value of the parameter being estimated.

Population Mean

The average of all the values in a population.

Sample Mean

The average value of a sample set of data, calculated by summing all observations and dividing by the number of observations.