Max Company Has Developed the Following Standards for One of Its

question 19

Multiple Choice

Max Company has developed the following standards for one of its products. $\begin{array}{ll}\text { Direct materials: } & 15 \text { kilograms } \times \$ 16 \text { per kilogram } \\\text { Direct labour: } & 4 \text { hours } \times \$ 24 \text { per hour } \\\text { Variable manufacturing overhead: } & 4 \text { hours } \times \$ 14 \text { per hour }\end{array}$

$\begin{array}{ll}\text { The following activity occurred during the month of October: }\\\text { Materials purchased: } & 10,000 \text { kilograms costing } \$ 170,000 \\\text { Materials used: } & 7,200 \text { kilograms } \\\text { Units produced: } & 500 \text { units } \\\text { Direct labour: } & 2,300 \text { hours at } \$ 23.60 / \text { hour } \\\text { Actual variable manufacturing overhead: } & \$ 30,000\end{array}$ The company records materials price variances at the time of purchase.
What is the direct materials price variance?

• A)$10,000 favourable
• B)$10,000 unfavourable
• C)$50,000 favourable
• D)$50,000 unfavourable

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Definitions:

Assumption Cells

In spreadsheet modeling, cells where the user can input assumptions that affect the outcomes of predictive models or simulations.

Run Preferences

Specific choices or settings selected for a computational or simulation run to affect its behavior or outcome.

Latin Hypercube Sampling

Latin Hypercube Sampling is a statistical method used to generate a sample of plausible collections of parameter values from a multidimensional distribution, often used in uncertainty analysis and optimization.