Following Is the Information About Standard Inc $\text { Standard Costs }$

question 48

Multiple Choice

Following is the information about Standard Inc. The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows: $\text { Standard Costs }$
$\begin{array}{ll}\text { Direct materials } & 2,500 \text { kilograms } @ \$ 8 \\\text { Direct labor } & 7,500 \text { hours } @ \$ 12\end{array}$

$\underline{\text { Actual Costs} }$
$\begin{array}{ll}\text { Direct materials } & 2,600 \text { kilograms } @ \$ 8.75 \\\text { Direct labor } & 7,400 \text { hours } @ \$ 11.40\end{array}$

$\text { Factory overhead ( } 100 \% \text { capacity - } 10,000 \text { hrs.) : }$

Variable cost $@ \$ 2$ per hour
Total variable cost, $\$ 18,000$
Fixed cost $@ \$ 0.80$ per hour
Total fixed cost, $\$ 8,000$ ?
The amount of the direct materials quantity variance is:

• A) $875 favorable.
• B) $875 unfavorable.
• C) $800 favorable.
• D) $800 unfavorable.

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Definitions:

Manufacturer

A company or individual that produces finished goods from raw materials through the use of machinery and labor, involved in the industrial sector of the economy.

Direct Lease

A lease agreement where the lessee directly leases the asset from the owner or lessor without using a third party.

Lessors Firm

A company that leases assets or property to another party, known as the lessee, under a contractual agreement.

CRA

Stands for the Canada Revenue Agency, which is responsible for administering tax laws for the Canadian government and for various provinces and territories.