Scotch Brand Products Produces Packaging Tape and Has Determined the Following

question 31

Multiple Choice

Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: $$\begin{array} { l r } \text { Material (3.50 ounces at } \$ 1.30 \text { per ounce) } & \$ 4.55 \\\text { Labor (0.30 hour at } \$ 12.00 \text { per hour) } & 3.60 \\\text { Overhead } & 2.20 \\\text { Total } & \$ 10.35\end{array}$$ At the start of 2017, Scotch Brand planned to produce 80,000 cases of tape during the year.Overhead is allocated based on the number of cases of tape produced.Annual fixed overhead is budgeted at $56,000 and variable overhead costs are budgeted at $1.50 per case.The following information summarizes the results for 2017:
-Actual production, 75,000 cases
-Purchased 275,000 ounces of material at a total cost of $343,750
-Used 266,250 ounces of material in production
-Employees worked 22,000 hours, total labor cost $275,000
-Actual overhead incurred, $175,000
How much is the material quantity variance for 2017?

• A)$4,875 unfavorable
• B)$8,875 favorable
• C)$$14,750 favorable
• D)$13,750 favorable

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Definitions:

Coefficient

A numerical or constant quantity placed before and multiplying the variable in an algebraic expression (e.g., the 4 in 4x).

Television Advertisement

A form of marketing communication broadcasted to promote or sell a product, service, or idea through television.

SSR

Sum of Squares due to Regression, an indicator of the explanatory power of the independent variables in a regression model.

SSE

Sum of Squared Errors, a measure used in statistics to quantify the deviation of the model predictions from the actual observed values.