Reference: 21_02
Kermit Enterprises Has Collected the Following Data on One

question 130

Multiple Choice

Reference: 21_02
Kermit Enterprises has collected the following data on one of its products:
$\begin{array}{ll}\text { Direct materials standard (4 lbs. @ \$1/lb.) } & \$ 4 \text { per finished unit } \\\text { Total direct materials cost variance-unfavorable } & \$ 7,500 \\\text { Actual direct materials used } & 150,000 \mathrm{lbs} . \\\text { Actual finished units produced } & 30,000 \text { units }\end{array}$
-The direct materials quantity variance is:

• A) $30,000 favorable
• B) $30,000 unfavorable
• C) $22,500 favorable
• D) $37,500 unfavorable
• E) $37,500 favorable

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Definitions:

Express Warranty

An explicit promise made by a seller about the condition, functionality, or performance of a product.

Warranty Of Merchantability

An implicit guarantee that a product sold by a merchant meets certain quality and performance standards.

Implied Warranty

A legal term indicating that a product is guaranteed to function as it is supposed to, even if not explicitly stated.

Warranty Of Fitness

A guarantee that a product will meet a buyer's specified needs and expectations.