Figure 17-5
Ebola Company Has Developed the Following Standards for One

question 52

Multiple Choice

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.
-Refer to Figure 17-5. Ebola's materials price variance would be

• A)£46,000 favourable.
• B)£46,000 unfavourable.
• C)£44,000 favourable.
• D)£44,000 unfavourable.

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Definitions:

Maximum Benefit

The highest level of advantage or gain that can be achieved from an action or decision, considering all relevant constraints and alternatives.

Satisfaction

The feeling of pleasure or fulfillment that comes from meeting or exceeding expectations.

Economic Self-interest

The motivation to act in a way that results in the greatest personal benefit or profit.

Economic Behavior

The study of how individuals make decisions to allocate resources under conditions of scarcity.