Ewing Corporation's Controller Has Developed the Cost and Usage Data

question 104

Multiple Choice

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. $\begin{array}{|l|l|}\hline \text { Direct materials quantity standard } & 3 \text { pounds per prochuct } \\\hline \text { Direct labor time standard } & 5 \text { hours per product } \\\hline \text { Direct materials price standard } & \$ 10 \text { per pound } \\\hline \text { Direct labor rate standard } & \$ 9 \text { per hour } \\\hline \text { Standard variable overhead rate } & \$ 5 \text { per labor hour } \\\hline \text { Standard fixed overhead rate } & \$ 10 \text { per labor hour } \\\hline \end{array}$
- The standard unit cost for direct materials is

• A) $30.
• B) $10.
• C) $50.
• D) $27.

---

Definitions:

Net Income

The total profit of a company after all revenues, costs, and expenses have been deducted, also known as the bottom line.

Acid-Test Ratio

A financial indicator that assesses the capacity of a business to settle its short-term obligations using its liquid assets.

Single-Step Income Statement

A form of income statement where all expenses are subtracted from total revenue in one step to arrive at net income.

FOB Destination

A term used in shipping indicating that the seller is responsible for the freight costs and owns the goods in transit until they are delivered to the buyer's location.