A Company Uses 40,000 Kilograms of Materials for Which They

question 16

Multiple Choice

A company uses 40,000 kilograms of materials for which they paid $9.00 a kilogram.The materials price variance was $80,000 favourable.What is the standard price per kilogram?

• A)$2.00
• B)$7.00
• C)$10.00
• D)$11.00

---

Definitions:

LIFO Cost

An inventory valuation method that assumes the last items placed in inventory are the first sold, implying newer inventory remains unsold.

Periodic Inventory

A method of inventory valuation where updates to the inventory levels and cost of goods sold are made at the end of an accounting period.

Inventory Balance

The total value of a company's inventory at the end of an accounting period, including raw materials, work-in-progress, and finished goods.

Inventory Turnover Distortion

A situation where the calculated rate of inventory turnover does not accurately reflect a business's actual efficiency in managing inventory.