Parallel Enterprises Has Collected the Following Data on One of Its

question 68

Multiple Choice

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is: Direct materials standard (7 kg. @ $2/kg) $ 14 per finished unit
Actual cost of materials purchased $ 322,500 ^{Actual direct materials purchased and used 150,000} lbs.

• A) $50,000 unfavorable.
• B) $22,500 unfavorable.
• C) $27,500 unfavorable.
• D) $22,500 favorable.
• E) $50,000 favorable.

---

Definitions:

Insolvent

Refers to a financial state where an entity cannot meet its debt obligations as they come due.

Obligations

A legal or financial duty that an entity is required to fulfill, such as debt repayment or service delivery.

Liabilities With Priority

Obligations of a business that are given precedence over other debts, especially in the context of bankruptcy or liquidation proceedings.