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.

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Definitions:

Raw Materials Costs

The expenses associated with acquiring raw materials required to manufacture a product.

Manufacturing Overhead

All the manufacturing costs except raw material and direct labor.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, depreciation, and salaries for production supervisors.

Direct Labor

The wages of those persons whose efforts directly affect the quality or other characteristics of the products manufactured.