Maxwell Co

question 168

Essay

Maxwell Co. collected the following information about its production activities for the current year.
a. Compute the direct materials price and quantity variances and indicate whether each is favorable or unfavorable.
b. Prepare the journal entry to record the issuance of direct materials into production.
Actual costs and quantities:
Direct materials used 95,000 lbs. @ $6.30 per lb.
Units completed during the year, 50,000 units
Standard costs and quantities:
Price per lb. of direct material, $6.05
Two lbs. of direct material per unit

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Definitions:

Deferred Taxes Payable

Liabilities for taxes owed that are recorded on the balance sheet to reflect timing differences between tax laws and accounting practices.

Net Income

Net Income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, indicating the company's financial health.

Prepaid Expenses

Payments made for goods or services that will be received and used in the future, treated as assets on a balance sheet until used.

Financing Activity

This refers to the transactions and events that involve raising capital and repaying investors, such as issuing equity or debt.