Miguez Corporation Makes a Product with the Following Standard Costs

question 81

Multiple Choice

Miguez Corporation makes a product with the following standard costs:
The company budgeted for production of 2,600 units in September, but actual production was 2,500 units. The company used 5,440 liters of direct material and 1,680 direct labor-hours to produce this output. The company purchased 5,800 liters of the direct material at $7.20 per liter. The actual direct labor rate was $24.10 per hour and the actual variable overhead rate was $1.90 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials quantity variance for September is:

• A) $2,170 U
• B) $2,232 U
• C) $2,170 F
• D) $2,232 F

---

Definitions:

Market Value

The current price at which an asset or service can be bought or sold in the marketplace.

Equity

The value of an owner's interest in a property, equal to the property's value minus the amount of existing liens.

Firm's Debt

The total amount of money that a company owes to creditors, including loans, bonds, and other financial liabilities.

Put Contracts

Financial derivatives that give the holder the right, but not the obligation, to sell a specific amount of a security at a specified price within a specified time period.