The Management of Guardian Fire Alarms Has Calculated the Following

question 123

Multiple Choice

The management of Guardian Fire Alarms has calculated the following variances: $$\begin{array} { | l | r | } \hline \text { Direct materials cost variance } & \$ 9000 \mathrm { U } \\\hline \text { Direct materials efficiency variance } & 36,000 \mathrm {~F} \\\hline \text { Direct labor cost variance } & 15,000 \mathrm {~F} \\\hline \text { Direct labor efficiency variance } & 13,500 \mathrm { U } \\\hline \text { Total variable overhead variance } & 8500 \mathrm {~F} \\\hline \text { Total fixed overhead variance } & 3000 \mathrm {~F} \\\hline\end{array}$$ What is the total direct materials variance of the company?

• A) $1500 F
• B) $27,000 F
• C) $11,500 F
• D) $6000 F

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Definitions:

Finished Goods Inventory

Refers to the inventory of goods that are completed and ready for sale.

Cost of Goods Manufactured

The total expense incurred in manufacturing goods, including materials, labor, and overhead, up to the point of completion.

Raw Materials

Primary components used to produce or fabricate products.

Direct Labor

The wages and expenses directly associated with workers who physically produce goods or provide services.