The Porter Company Has a Standard Cost System

question 52

Multiple Choice

The Porter Company has a standard cost system.In July,the company purchased and used 22,500 kilograms of direct material at an actual cost of $53,000,the materials quantity variance was $1,875 unfavourable,and the standard quantity of materials allowed for July production was 21,750 kilograms.What was the materials price variance for July?

• A) $2,725 favourable.
• B) $2,725 unfavourable.
• C) $3,250 favourable.
• D) $3,250 unfavourable.Variance = 22,500 * 2.50 - 53,000 = $3,250 favourable.

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Definitions:

North American Free Trade Agreement (NAFTA)

A treaty entered into by the United States, Canada, and Mexico; it was designed to remove tariff barriers between the three countries.

General Motors (GM)

An American multinational corporation headquartered in Detroit that designs, manufactures, markets, and distributes vehicles and vehicle parts.

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