Seafarer Company Established a Standard Direct Materials Cost of 1

question 64

Multiple Choice

Seafarer Company established a standard direct materials cost of 1.5 gallons at $2 per gallon for one unit of its product.During the past month,actual production was 6,500 units.The material quantity variance was $700 favorable and the material price variance was $470 unfavorable.The entry to charge Work in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include all of the following except:

• A)A debit to Work in Process for $19,500.
• B)A credit to Raw Materials for $19,270.
• C)A debit to Direct Material Price Variance for $470.
• D)A credit to Direct Material Quantity Variance for $700.
• E)A debit to Cost of Goods Sold for $230.

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Definitions:

Ordinary General Annuity

An annuity where payments are made at the end of each period in a series of equal or fixed payments.

Future Value

The equivalence in value of a future asset or monetary sum to a specified current amount.

Accurate To The Cent

Describes a level of precision in financial transactions where amounts are calculated exactly to the smallest currency unit, such as a cent.

Compounded Quarterly

A technique for computing interest in which the interest is compounded to the principal balance quarterly.