Tommy's Toys Produces Two Types of Toys: Trains and Dolls

question 171

Multiple Choice

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows: What is the direct material quantity variance for plastic in the dolls?

• A)$378 favorable
• B)$1,422 favorable
• C)$378 unfavorable
• D)$1,422 unfavorable

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Definitions:

Inventory

The goods and materials a business holds for the ultimate goal of resale or production.

Amortization

The process of spreading out a loan into a series of fixed payments over time, which includes both principal and interest.

Patent

An exclusive right granted for an invention, which allows the patent owner to exclude others from making, using, or selling the invention.

Book Value

The difference between the total assets and total liabilities of a company, indicating its net asset value as recorded on the balance sheet.