Ruby Company Produces a Chair for Which the Standard Specifies

question 41

Essay

Ruby Company produces a chair for which the standard specifies 5 yards of material per unit. The standard price of one yard of material is $7.50. During the month, 8,400 chairs were manufactured, using 43,700 yards at a cost of $7.30 per yard.​
Determine the (a) direct materials price variance, (b) direct materials quantity variance, and (c) total direct materials cost variance.

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Definitions:

Natural Monopoly

A market situation where a single firm can supply a good or service to an entire market at a lower cost than could multiple firms.

Minimum Efficient Scale

The smallest scale of production at which long-term average costs are minimized, reflecting the point at which economies of scale are fully exploited.

Exclusive Legal Right

An exclusive legal right is a privilege granted by law to an individual or entity to engage in a particular activity or to use a particular property, which is protected against infringement or unauthorized use by others.

Patent

is a legal right granted to an inventor or assignee, providing exclusive rights to make, use, or sell an invention for a certain number of years in exchange for public disclosure of the invention.