A Manufacturer Planned to Use $82

question 145

Multiple Choice

A manufacturer planned to use $82.00 of materials per unit produced, but in the most recent period it actually used $80.00 of material per unit produced. During this same period, the company planned to produce 1,200 units, but actually produced only 1,000 units. The flexible-budget variance for materials, to the nearest dollar, is:

• A) $2,000 favorable.
• B) Impossible to determine without additional information.
• C) $14,000 unfavorable.
• D) $16,400 unfavorable.
• E) $2,400 unfavorable.

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Definitions:

Prototype Testing

The process of evaluating a preliminary model of a product to identify any potential issues or improvements before it is produced on a larger scale or released to the market.

Profitability Ratios

Financial metrics used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Leverage Ratios

Financial metrics used to assess a company's ability to meet its financial obligations, with a focus on its use of debt.

Asset Management Ratio

Asset Management Ratio is a financial metric that assesses how effectively an organization is managing its assets to generate revenue, including turnover ratios for inventory, receivables, and fixed assets.