If the Direct Materials Purchased Is $200 Per Per Unit

question 143

Multiple Choice

If the direct materials purchased is $200 per per unit while the standard price for direct materials is $180, and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 980 units,

• A)The direct materials quantity variance will be favorable
• B)The direct materials quantity variance will be unfavorable
• C)The direct materials price variance will be favorable
• D)There will be no direct materials price variance

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Definitions:

Revaluation Method

An accounting technique that involves adjusting the book value of an asset to reflect its current fair market value.

Intangible

Assets that lack physical substance but have value due to their intellectual property or other non-physical qualities, such as patents, trademarks, and goodwill.

Amortisation

The systematic allocation of the depreciable amount of an intangible asset over its useful life.

Impairment

A reduction in the recoverable value of an asset below its carrying amount on the balance sheet, leading to a write-down of its value.