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:

Overhead Cost

Expenses related to the operation of a business that are not directly tied to a specific product or service, such as rent and utilities.

Activity Cost Pools

Groupings of individual costs associated with specific activities used in activity-based costing to allocate costs more accurately.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities they require, improving cost accuracy.

Direct Labor-Hours

The cumulative hours put in by workers who are directly engaged in the production process.