The Following Data Pertains to the Direct Materials Cost for the Month

question 152

Multiple Choice

The following data pertains to the direct materials cost for the month of October:
$$\begin{array} { l l } \text { Standard costs } & 5,000 \text { units allowed at } \$ 20 \text { each } \\\text { Actual costs } & 5,050 \text { units input at } \$ 19 \text { each }\end{array}$$ What is the direct materials efficiency variance?

• A) $950 favorable
• B) $950 unfavorable
• C) $1,000 favorable
• D) $1,000 unfavorable

---

Definitions:

Federal Trade Commission

A federal agency established to protect consumers and promote competition by preventing anticompetitive, deceptive, and unfair business practices.

Price-Fixing

An illegal agreement among competitors to set prices at a certain level, rather than letting them be determined naturally by supply and demand.

Economic Efficiency

A state in which resources are allocated in a way that maximizes the production of goods and services at the lowest cost, while achieving the highest possible welfare or utility.

Negative Externalities

Costs experienced by third parties due to the actions of others that are not reflected in market prices.