A Company Established a Direct Material Standard of 2 Pounds

question 76

Multiple Choice

A company established a direct material standard of 2 pounds of material at a cost of $6 per pound for unit produced. During August the company produced 6,000 units of product. 10,000 pounds of direct material which cost $6.50 per pound were used in the production process. Compute the direct material price variance for August.

• A) $5,000 unfavorable.
• B) $12,000 unfavorable.
• C) $5,000 favorable.
• D) $12,000 favorable.
• E) $7,000 favorable.

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Definitions:

Regulatory

Pertaining to rules or directives made and maintained by an authority to regulate activities within specific fields.

Revenue Raising

Revenue raising refers to the process or strategies employed by governments or organizations to generate financial income, often through taxes, fees, or sales.

Public Policy

Principles and standards considered by government to benefit the community and used to guide legislative and administrative actions.

Department of Labor

A government agency responsible for occupational safety, wage standards, unemployment insurance benefits, re-employment services, and some economic statistics.