Matinna Co All Materials Purchased During the Month Were Issued to Production

question 58

Multiple Choice

Matinna Co. maintains no inventories and has the following data pertaining to one of its direct materials in July: $\begin{array}{lrr}\text { Standard quantity of direct materials for the units manufactured (SQ) } & 30,000 \\\text { Direct materials purchases-actual cost } & \$ 63,000 \\\text { Standard price per unit of direct materials (SP) } & \$ 2.00 \\\text { Direct material efficiency variance-favorable } & \$ 4,500\end{array}$ All materials purchased during the month were issued to production.
What was the direct materials price variance for July, rounded to the nearest dollar?

• A) $1,500 favorable.
• B) $3,000 unfavorable.
• C) $3,000 favorable.
• D) $7,500 unfavorable.
• E) $7,500 favorable.

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Definitions:

Owner's Capital

The total value of all assets contributed by the owner to a business minus any withdrawals, representing the owner's equity in the company.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against the cost of a fixed asset, reducing its book value over time.

Permanent Account

An account that carries its ending balance over to the next accounting period, typically representing real accounts like assets, liabilities, and equity.

Closing Process

The steps taken at the end of an accounting period to prepare accounts for the next period, including zeroing out temporary accounts.