The Shum Company Makes a Product, Z, from Two Materials

question 104

Multiple Choice

The Shum Company makes a product, Z, from two materials: X and Y. The standard prices and quantities are as follows:
$\begin{array}{lrr} &\text { X } & \text {Y } \\ \text { Price per pound} &\$6&\$9\\ \text { Pounds per unit of product \( Z \) } &10&5\\\end{array}$

In May, 21,000 units of Z were produced by Shum Company, with the following actual prices and quantities of materials used:
$\begin{array}{lrr} &\text { X } & \text { Y } \\ \text { Price per pound } &\$5.70&\$8.40\\ \text { Pounds used } &216,000&114,000\\\end{array}$

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What is the total direct materials mix variance for May?

• A) $12,000.
• B) $24,000.
• C) $36,000.
• D) $60,000.

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Definitions:

MRP Schedule

A chart or table that shows the marginal revenue product of labor, detailing how changes in the quantity of labor employed will impact total revenue generated.

Economic Rent

A payment to an owner or factor of production in excess of the costs needed to bring that factor into production.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production.

Wages

Payments made to employees for their labor, typically calculated on an hourly, daily, or piecework basis.