The Standard Costs and Actual Costs for Direct Materials for the Manufacture

question 45

Multiple Choice

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are as follows: The amount of direct materials price variance is:

• A) $2,250 unfavorable
• B) $1,950 favorable
• C) $1,875 favorable
• D) $1,950 unfavorable

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Definitions:

Finished Product

Goods that have been completed through the manufacturing process and are ready to be sold.

Supply Chain

The network of all the individuals, organizations, resources, activities, and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, and eventually to the end user.

Product or Service

The final output offered by a company to consumers, which can either be a tangible item (product) or an activity benefiting the customer (service).

Raw Materials Inventory

Goods or components that a company uses in the manufacture of finished products.