During June, Cisco Company Produced 12,000 Chainsaw Blades

question 34

Multiple Choice

During June, Cisco Company produced 12,000 chainsaw blades.The standard quantity of material allowed per unit was 1.5 pounds of steel per blade at a standard cost of $8 per pound.The actual cost was $7 per pound.The actual pounds of steel that Cisco purchased were 19,500 pounds.All materials purchased were used.Calculate Cisco's materials usage variance.

• A) $10,500 U
• B) $12,000 F
• C) $12,000 U
• D) $10,500 F

---

Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Variable Costing

A costing approach where variable costs are assigned to inventory and fixed costs are treated as expenses in the period they are incurred, focusing on the costs that change with production levels.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output, including rent, salaries of permanent staff, and depreciation of factory equipment.