Precilla Company Uses a Standard Costing System That Allows 2

question 168

Multiple Choice

Precilla Company uses a standard costing system that allows 2.0 pounds of direct materials for one finished unit of product. During July, the company purchased 40,000 pounds of direct materials for $210,000, and manufactured 12,000 finished units. The standard direct materials cost allowed for the units manufactured is $120,000. The performance report shows that Precilla has an unfavorable direct materials usage variance of $5,000. Also, the company records any price variance for materials at time of purchase.

The actual number of pounds (AQ) of direct materials used to produce July's output, to the nearest whole number, was:

• A) 12,000 pounds.
• B) 20,000 pounds.
• C) 24,000 pounds.
• D) 25,000 pounds.
• E) 40,000 pounds.

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Definitions:

Coconuts

Tropical fruits with a hard shell, edible white flesh, and clear liquid inside, often found in coastal regions.

Factor Of Production

An input used in the creation of a good or service; these include labor, capital, land, and entrepreneurship.

Factor Market

The factor market is where services of the factors of production (such as labor, land, and capital) are bought and sold.

Lunch

A meal typically eaten in the middle of the day, between breakfast and dinner.