Fletcher Company Collected the Following Data Regarding Production of One

question 161

Multiple Choice

Fletcher Company collected the following data regarding production of one of its products. Compute the total direct materials cost variance. $\begin{array}{llr} \text { Direct materrals standard (6 lbs. @ \$2/1b.) } &\$12& \text { per finished unit } \\ \text { Actual direct materials used} &243,000& \text {Ibs. } \\ \text {Actual finished units produced } &40,000& \text {units } \\ \text { Actual cost of direct materials used } &\$483,570\\\end{array}$

• A) $2,430 favorable.
• B) $6,000 unfavorable.
• C) $6,000 favorable.
• D) $3,570 favorable.
• E) $3,570 unfavorable.

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Definitions:

Judgmental Factors

Elements that require personal assessment and decision-making in the valuation of assets, determination of liabilities, or other financial reporting activities.

Static Budget

A budget that remains unchanged over the period it covers, regardless of changes in sales volume, production levels, or other external factors, often used for fixed expenses.

Control Costs

The practice of managing and regulating expenses to ensure they do not exceed budgets.

Activity Level

A measure of the volume of production or operations, usually influencing costs and revenues in managerial accounting.