Ready Company Adds Direct Materials at the Beginning of the Process

question 256

Multiple Choice

Ready Company adds direct materials at the beginning of the process and adds conversion costs throughout the process.Data for the Finishing Department follows:

What are the equivalent units for direct materials?

• A)67,000
• B)61,000
• C)51,000
• D)55,000

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Definitions:

Materials Price Variance

The difference between the actual cost of materials purchased and the expected cost based on the standard price.

Materials Quantity Variance

The variance between the actual and projected amounts of materials consumed in manufacturing, multiplied by the unit's standard cost.

Standard Cost

An estimated or pre-determined cost of manufacturing a product, which is used for budgeting and performance evaluation.

Fixed Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, attributed to variations in production volume.