Boxes Company Has Collected the Following Data for One of Its

question 21

Multiple Choice

Boxes Company has collected the following data for one of its products:
$\begin{array}{|l|r|}\hline\text { Direct materials standard (3 pounds @ } \$ 1 / 1 \mathrm{~b} .) & \$ 3 \text { per finished good } \\\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \\\hline \text { Actual direct materials used } & 100,000 \text { pounds } \\\hline \text { Actual finished goods produced } & 25,000 \text { units } \\\hline\end{array}$
How much is the direct materials efficiency variance?

• A) $11,000 unfavorable
• B) $11,000 favorable
• C) $25,000 unfavorable
• D) $25,000 favorable

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Definitions:

Selling Price

The price at which a product or service is offered to the buyer.

Markup Percent

The fraction of the cost price of items increased to cover operational expenses and secure profit.

Cost

The amount of money required to purchase goods or services or the expenditure incurred in the production of goods.

Markup Percent

The rate applied on top of the buying price of goods to encompass overhead expenses and earn profit.