Marks Company Makes One Product,for Which It Has Established the Following

question 33

Essay

Marks Company makes one product,for which it has established the following standards for materials:
Average quantity of material per unit of product: 4.5 pounds
Price per pound of materials: $16
During March,Marks made 10,000 units of the product,using 50,000 pounds at a total purchase price of $825,000.
Required:
(a)Determine the total flexible budget materials variance and indicate whether it is favorable or unfavorable.
(b)Calculate the materials price variance and indicate whether it is favorable or unfavorable.
(c)Determine the materials usage variance and indicate whether it is favorable or unfavorable.

---

Definitions:

Company's Value

An assessment of a business's total worth, based on factors such as assets, earnings, and market position.

Short-term Loan

A loan scheduled to be repaid in less than a year, used for immediate cash flow needs.

Convertible Debt

A type of financing where a loan made to a company can be converted into equity, usually upon the occurrence of future financing rounds.

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, which represents the residual value to shareholders after debts and liabilities have been settled.