McNabb Corporation Makes Shoe Polish

question 25

Essay

McNabb Corporation makes shoe polish. The standard direct materials quantity is .5 pounds per container at a cost of $2.25 per pound. The actual usage for the production of 33,000 containers was .55 pounds per cushion at an actual cost of $2.20 per pound. Calculate the direct materials price variance and the direct materials quantity variance.

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Definitions:

Treasury Stock

Shares that were issued and then repurchased by the issuing company, reducing the amount of outstanding stock on the open market.

Owners' Equity

The residual interest in the assets of a company after deducting its liabilities, reflecting the capital invested by the owners plus retained earnings.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, often with dividend payment preference.

Deductible Corporate Expense

Expenses that a corporation can subtract from its gross income to reduce its taxable income, according to tax laws.