Cryolite Uses a Standard Costing System to Gauge Results for Their

question 110

Multiple Choice

Cryolite uses a standard costing system to gauge results for their single product. 70,000 kilograms of direct materials were purchased for $385,000. Two kilograms of direct materials are needed to produce one unit of product. In March, the company produced 12,000 units. The standard cost allowed for direct material was $120,000, and there was an unfavourable direct materials efficiency variance of $2,500.
The direct materials price variance for March is:

• A) $25,000 favourable
• B) $25,000 unfavourable
• C) $35,000 favourable
• D) $35,000 unfavourable

---

Definitions:

NPV Distribution

Refers to the distribution of net present values across different potential investments or projects.

Conditional Probability

The probability of one event occurring with some relationship to one or more other events.

Real Option

A choice available to companies involving business decisions on investments, which use the concept of option valuation in financial markets.

Scenario Analysis

A process of analyzing future events by considering alternative possible outcomes (scenarios), often used in the assessment of risk or strategic planning.