The Standard Materials Cost to Produce One Unit of Product

question 83

Multiple Choice

The standard materials cost to produce one unit of Product M is 6 pounds of material at a standard price of $50 per pound.In manufacturing 8,000 units,47,000 pounds of material were used at a cost of $51 per pound.What is the total direct material cost variance?

• A) $48,000 unfavorable
• B) $51,000 favorable
• C) $51,000 unfavorable
• D) $ 3,000 favorable
• E) $ 3,000 unfavorable

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Definitions:

Homogeneous Product

A product that is considered the same across different producers, making it indistinguishable in the eyes of the consumer.

Differentiated Product

A product that is distinct from its competitors by virtue of unique features, benefits, or quality.

Large Relative

Describing an entity or value that is significantly larger in comparison to others within a given context.

Market Power

An imperfectly competitive firm’s ability to raise price without losing all of the quantity demanded for its product.