Ewing Corporation's Controller Has Developed the Cost and Usage Data

question 114

Multiple Choice

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. $\begin{array} { lr } \text { Direct materials quantity standard}& \text {3 pounds per product }\\ \text {Direct labor time standard }& \text {5 hours per product }\\ \text {Direct materials price standard }& \text { \( \$ 10 \) per pound}\\ \text {Direct labor rate standard }& \text { \( \$ 9 \) per hour}\\ \text { Standard variable overhead rate}& \text { \( \$ 5 \) per labor hour}\\ \text { Standard fixed overhead rate}& \text {\( \$ 10 \) per labor hour }\\\end{array}$
The standard unit cost for direct labor is

• A) $45.
• B) $27.
• C) $135.
• D) $9.

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Definitions:

Binding Price Floor

A government or regulatory-imposed price control that sets a minimum price for a good or service, potentially leading to excess supply if set above the equilibrium price.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices during a specified period.

Binding Price Floor

A government or regulatory-imposed price control that sets the minimum price that can be charged for a good or service, above the equilibrium price, leading to potential surpluses.

Surplus

Surplus refers to the amount by which production, resources, or inventory exceeds what is needed or used, often resulting in excess supply.