Copper Company Reports the Following Standards for Direct Materials for the Year

question 220

Essay

Copper Company reports the following standards for direct materials for the year:
Standard cost per kilogram $2.50
Standard amount per finished good 6 kilograms
During the year, 420,000 finished goods were produced. The direct materials price variance was $13,600 unfavourable. The direct materials flexible budget variance was $1,200 favourable. The quantity of direct materials purchased was the same as the amount used.
Calculate the following items regarding direct materials for Douglas Corporation for the year:
1. Direct materials efficiency variance
2. Standard quantity of direct materials for actual production
3. Actual kilograms of direct materials used for actual production

Recognize the cost implications of offering trade credit discounts and the use of stretching accounts payable.

Identify the purposes and differences between short-term and long-term cash budgets.

Understand the principles guiding the use of trade credit and the evaluation of credit cost.

Comprehend the implications of using short-term over long-term financing, including interest rate risks.

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