Doogan Corporation Makes a Product with the Following Standard Costs

question 155

Multiple Choice

Doogan Corporation makes a product with the following standard costs:
The company produced 5,200 units in January using 39,310 grams of direct material and 2,380 direct labor-hours. During the month, the company purchased 44,400 grams of the direct material at $1.70 per gram. The actual direct labor rate was $19.30 per hour and the actual variable overhead rate was $6.80 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 price variance for January is:

• A) $13,320 U
• B) $13,320 F
• C) $11,544 F
• D) $11,544 U

---

Definitions:

Third-party Beneficiary Contract

A contract designed in such a way that a party not directly involved in the agreement receives a benefit from the contract.

Accord And Satisfaction

An arrangement between contracting parties whereby one of the parties substitutes a different performance for his or her original duty under the contract.

Novation

The act of replacing one obligation with another, effectively creating a new contract and releasing the original party from responsibility.

Assignment

The transfer of rights, property, or responsibilities from one party to another.