Kelvin CoProduces and Sells Socks

question 64

Multiple Choice

Kelvin Co.produces and sells socks.Variable costs are $4 per pair,and fixed costs for the year total $90,000.The selling price is $6 per pair.The sales units required to make an after-tax profit of $15,000,given an income tax rate of 40 percent,are:

• A)47,500 units.
• B)56,500 units.
• C)65,661units.
• D)60,000 units.
• E)57,500 units.

---

Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected amount of materials that should have been used, measured at the standard cost.

Labor Efficiency Variance

The deviation between the actual hours taken to produce a unit of output and the standard hours expected, multiplied by the standard labor rate.

Materials Price Variance

The difference between the actual cost of direct materials and the expected cost at standard prices.

Materials Quantity Variance

The difference between the actual amount of materials used in production and the standard amount expected, multiplied by the standard cost per unit.