A Company Developed the Following Per Unit Materials Standards for Its

question 6

Multiple Choice

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If 12000 units of product were produced last month and 37500 pounds of direct materials were used the direct materials quantity variance was

• A) $4500 favorable.
• B) $7500 unfavorable.
• C) $4500 unfavorable.
• D) $7500 favorable.

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Definitions:

Goods In Transit

Items that are in the process of being transported from one location to another, not yet reached the buyer or final destination.

Gross Profit

The financial metric that subtracts the cost of goods sold from sales revenue, representing the amount a company makes after covering the direct costs associated with production.

Selling Expenses

Costs associated with marketing and selling a company's products or services.

Net Income

Net income, also known as net profit, is the total earnings of a company after subtracting all expenses, taxes, and costs from total revenue.