A Company Makes a Product Using Two Materials,one of Which

question 128

Multiple Choice

A company makes a product using two materials,one of which is interchangeable with a third material.The standards for producing one 200-pound batch are presented below.The last 200-pound batch was produced using 140 pounds of M and 90 pounds of O.The price of M was $0.03 per pound and the actual price of O was $0.10. $$\begin{array} { | l | r | r | r | } \hline \text { Material } & \begin{array} { r } \text { Standard } \\\text { Quantity (lbs) }\end{array} & \begin{array} { r } \text { LBS Standard } \\\text { Costrb }\end{array} & \text { Total Cost } \\\hline \mathrm { O } & 0 & \$ .10 & \$ 0 \\\hline \mathrm { H } & 80 & .08 & 6.40 \\\hline \mathrm { M } & 120 & .02 & 2.40 \\\hline &\underline{ 200} & &\underline{ \$ 8.80} \\\hline\end{array}$$ What is the materials yield variance?

• A) $1.12.
• B) $1.68.
• C) $3.00.
• D) $1.32.

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Definitions:

Cash Receipts Journal

An accounting journal used to record all receipts of cash, including sales made for cash and payments received from debtors.

Accounts Receivable Journal

A ledger used to record sales transactions where payment is to be received in the future, detailing each customer’s purchase on credit.

Purchases Journal

A specialized accounting journal used to record the purchasing of goods and services on credit.

Promissory Note

A financial instrument in which the writer promises in writing to pay a determinate sum of money to the payee under specific terms.