The Standard Materials Cost to Produce 1 Unit of Product

question 54

Multiple Choice

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound.In manufacturing 8,000 units,47,000 pounds of material were used at a cost of $51 per pound.What is the total direct materials cost variance?

• A)$48,000 unfavorable.
• B)$51,000 favorable.
• C)$51,000 unfavorable.
• D)$3,000 favorable.
• E)$3,000 unfavorable.

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Definitions:

Fixed Expenses

Expenses that remain constant regardless of the amount of output or sales, including items like lease payments, wages, and insurance costs.

Net Income

The net income of a company, which is calculated by deducting all costs and taxes from its total earnings.

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no net loss or gain.

Contribution Margin Ratio

A financial metric that represents the percentage of sale price that remains after variable costs are subtracted.