Efficient Corporation Uses a Standard Cost System ? the Direct Materials Cost Variance Is:
A) $1,125 Favorable

question 66

Multiple Choice

Efficient Corporation uses a standard cost system.The following information was provided for the period that just ended: $\begin{array}{ll}\text { Actual price per gallon } & \$ 11.75 \\\text { Actual gallons of material used } & 5,000 \\\text { Actual hourly labor rate } & \$ 17.00 \\\text { Actual hours of production } & 24,300 \\\text { Standard price per gallon } & \$ 12.00 \\\text { Standard gallons per completed unit } & 1 / 2 \\\text { Standard hourly labor rate } & \$ 12.00 \\\text { Standard time per completed unit } & 3 \text { hrs. } \\\text { Units completed during the period } & 9,000\end{array}$ ? The direct materials cost variance is:

• A) $1,125 favorable.
• B) $4,750 unfavorable.
• C) $6,000 unfavorable.
• D) $7,125 unfavorable.

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Definitions:

Completeness

In decision theory, a property that states every set of choices can be ranked in an order of preference.

Marginal Rate

Typically refers to the additional cost or benefit received from producing one more unit of a good or service.

Indifference Curve

A graph that shows combinations of goods between which a consumer is indifferent, meaning they derive the same level of satisfaction from each combination.

Preferences

Individual tastes or desires that influence choice behavior, guiding decisions in the face of scarcity.