Shipp Inc Manufactures a Product Requiring Two Pounds of Direct Material

question 24

Multiple Choice

Shipp Inc. manufactures a product requiring two pounds of direct material. During 2016 Shipp purchases 24000 pounds of material for $99200 when the standard price per pound is $4. During 2016 Shipp uses 22000 pounds to make 12000 products. The standard direct material cost per unit of finished product is

• A) $8.27.
• B) $9.01.
• C) $8.00.
• D) $8.53.

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Definitions:

Type I Error

The error of rejecting a true null hypothesis, also known as a "false positive."

Null Hypothesis

An assertion or proposition in statistics that indicates no significant difference or effect, serving as the default assumption to test against.

Type II Error

The error that occurs when the null hypothesis is falsely accepted, failing to detect an effect or difference when one actually exists.

Null Hypothesis

The hypothesis in statistical analysis that posits no significant difference or relationship exists among groups or variables being studied.