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

question 163

Multiple Choice

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 2,800 gallons of direct materials that actually cost $10,600 were used to produce 1,500 units of product. The direct materials quantity variance for last month was

• A) $800 favorable.
• B) $600 favorable.
• C) $800 unfavorable.
• D) $1,400 unfavorable.

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Definitions:

Productivity

A measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.

Compensation

The full quantity of cash and other forms of rewards offered to an employee by their employer as compensation for services rendered.

Straight Commission

A compensation model where an employee's pay is based entirely on the sales they generate, with no base salary.

Profit-sharing Plans

A company program where employees receive a portion of the company's profits, linking compensation to the company's financial performance.