Mandato Corporation Has Provided the Following Data for Its Two

question 184

Multiple Choice

Mandato Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under variable costing in Year 2 is closest to:

• A) $74,000
• B) $216,000
• C) $261,000
• D) $68,000

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Definitions:

Materials Quantity Variance

The variance between the actual amount of materials utilized in manufacturing and the anticipated amount, multiplied by the established unit cost.

Raw Materials Price Variance

The difference between the actual cost and the standard cost of raw materials used in production.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected amount of materials that should have been used, measured at the standard cost.

Labor Efficiency Variance

The deviation between the actual hours taken to produce a unit of output and the standard hours expected, multiplied by the standard labor rate.