Reference: 11-09
the Following Materials Standards Have Been Established for a Particular

question 88

Multiple Choice

Reference: 11-09
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 6.8 & \text { metres } \\\hline \text { Standard price } & \$ 17.10 & \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 9,000 & \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 156,600 & \\\hline \text { Actual materials used in production } & 8,500 & \text { metres } \\\hline \text { Actual output } & 1,200 & \text { units } \\\hline\end{array}\end{array}$$
-The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard quantity per unit of output } & 8.3 \text { grams } \\\hline \text { Standard price } & \$ 19.15 \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual materials purchased } & 7,500 \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 141,375 \\\hline \text { Actual materials used in production } & 7,100 \text { grams } \\\hline \text { Actual output } & 700 \text { units } \\\hline\end{array}\end{array}$$ What is the materials price variance for the month?

• A)$7,540 U.
• B)$24,317 U.
• C)$7,660U.
• D)$2,250 F.

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Definitions:

Cross Price Elasticity

A measure of the responsiveness of the quantity demanded for one good to a change in the price of another good, indicating the degree of substitutability or complementarity between them.

Midpoint Method

The midpoint method is a technique used in economics to measure the elasticity of demand or supply, minimizing the bias in the response to price changes by using the average percentages of change in both quantity and price.

Income

Earnings acquired on a routine basis through work or investment profits.

Price Elastic

Describes a situation where the demand for a product changes significantly in response to a change in the product's price.