The Per-Unit Standards for Direct Materials Are 2 Gallons at $4

question 152

Multiple Choice

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month 11200 gallons of direct materials that actually cost $42400 were used to produce 6000 units of product. The direct materials quantity variance for last month was

• A) $3200 favorable.
• B) $2400 favorable.
• C) $3200 unfavorable.
• D) $5600 unfavorable.

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Definitions:

Adequate Cash Flow

Sufficient amounts of cash on hand that an entity has to meet its financial obligations and operational needs.

Bills

Documents indicating a transaction or an obligation to pay for goods or services received.

QBO

Refers to QuickBooks Online, an accounting software based in the cloud, aimed at assisting small to medium businesses.

Expenses

The costs incurred by a business or individual in the process of earning revenue.