Precilla Company Uses a Standard Costing System That Allows 2

question 109

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 direct materials purchase-price variance in July (to the nearest dollar) was:

• A) $10,000 unfavorable.
• B) $50,000 unfavorable.
• C) $80,000 unfavorable.
• D) $86,000 unfavorable.
• E) $90,000 unfavorable.

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Definitions:

FMVSS-121

Federal Motor Vehicle Safety Standard 121, which outlines the requirements for air brake systems in commercial vehicles to ensure safe stopping distances.

Disc Brakes

Vehicle brake system in which squeeze pressure is applied to a rotor by a caliper. Both pneumatic and hydraulic disc brakes are used on trucks.

Wedge Brakes

A type of brake mechanism where a wedge is used to press brake linings against a drum or rotor to slow or stop motion, often found in heavy vehicles.

Primary Circuit

The main electrical circuit in a system, responsible for providing power to the essential components or functions.