The Reindeer Company Makes Mugs for Which the Following Standards

question 121

Multiple Choice

The Reindeer Company makes mugs for which the following standards have been developed: Production of 400 mugs was expected in July,but 440 mugs were actually completed.Direct materials purchased and used were 2,100 ounces at an actual price of $2.30 per ounce.Direct labor cost for the month was $5,310,and the actual pay per hour was $9.00.What is the direct material price variance for July?

• A)$400 Favorable
• B)$400 Unfavorable
• C)$630 Favorable
• D)$630 Unfavorable

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Definitions:

Account Payable

The liability created by a purchase on account.

Solvency Analysis

An assessment of a company's ability to meet its long-term financial obligations.

Noncurrent Liabilities

Financial obligations of a company that are not due to be settled within one year, including long-term loans, bonds payable, and long-term lease obligations.

Current

In finance, "current" typically refers to assets and liabilities that are expected to be realized or settled within one year from the reporting date.