Use the Information Below to Answer the Following Question(s)

question 54

Multiple Choice

Use the information below to answer the following question(s) .
The following data for a pottery company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used) :
Standard cost: $6.00 per kilogram of clay
Total actual cost: $11,200
Standard cost allowed for units produced was $12,000
Materials efficiency variance was $240 unfavourable
Direct Manufacturing Labour:
Standard cost is 2 pots per hour at $24.00 per hour
Actual cost per hour was $24.50
Actual labour was 972 hours
-What is the direct materials rate variance for the clay pots?

• A) $560 unfavourable
• B) $560 favourable
• C) $800 favourable
• D) $1,040 favourable

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Definitions:

Price

The cash amount forecasted, required, or paid out for acquiring something.

Normal Good

A product or service for which demand increases as consumer income increases, and vice versa, demonstrating a direct relationship between income and demand.

Income

The financial gain earned by an individual or entity, typically through wages, investments, or other forms of revenue.

Demand

The desire to own goods or services combined with the ability and willingness to pay for them.