Use the Following Information for Questions

question 132

Multiple Choice

Use the following information for questions
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.
-The standard direct materials quantity per unit is

• A) 2.6 pounds.
• B) 2.7 pounds.
• C) 2.9 pounds.
• D) 3.0 pounds.

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Definitions:

Inelastic Demand

A situation where the demand for a good or service is relatively unaffected by changes in price.

Available Substitutes

Alternative products or services that consumers can opt for when faced with changes in price or availability of the original product.

Luxury Good

A good for which demand increases more than proportionally as income rises, and is often seen as a status symbol rather than a necessity.

Coffee And Tea

Two popular beverages consumed worldwide, derived from brewing the roasted seeds of the Coffea plant and the dried leaves of the Camellia sinensis plant, respectively.