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:

Nation States

Political entities consisting of a clearly defined territory and population that is politically organized under a sovereign government.

International Organizations

Entities established by treaties between governments for purposes of conducting activities and fostering cooperation among member countries across borders.

International Agreements

Formal arrangements between two or more countries governed by international law, which can relate to trade, peace, cooperation, or other mutual interests.

Neoliberal Globalization

Refers to the process of accelerating economic integration, market deregulation, and diminishing state intervention across countries, pushed by neoliberal policies.