The Following Data Relate to Direct Materials Costs for February

question 98

Multiple Choice

The following data relate to direct materials costs for February:
Materials cost per yard: standard, $2.00; actual, $2.10
Yards per unit: standard, 4.5 yards; actual, 4.75 yards
Units of production: 9,500
-The direct materials price variance is

• A)$1,795.50 favorable
• B)$378.00 favorable
• C)$4,512.50 unfavorable
• D)$378.00 unfavorable

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Definitions:

Resource Allocation

The process of distributing available resources among different uses identified in an economy.

Taxing Polluters

A policy approach that imposes taxes on companies or individuals who produce pollution as a means to internalize environmental externalities and encourage pollution reduction.

Positive Externalities

Benefits that affect a third party not directly involved in a transaction or activity, resulting in a positive effect on society.

Principal-Agent Problem

A dilemma in economics where one party (the agent), acting on behalf of another party (the principal), may have different goals or incentives, potentially leading to inefficiencies.