Shawn IncPlanned to Produce 3,000 Units of Its Single Product,Megatron,during November

question 33

Multiple Choice

Shawn Inc.planned to produce 3,000 units of its single product,Megatron,during November.The standard specifications for one unit of Megatron include six pounds of material at $0.30 per pound.Actual production in November was 3,100 units of Megatron.The accountant computed a favorable materials purchase price variance of $380 and an unfavorable materials quantity variance of $120.Based on these variances,one could conclude that: (CMA adapted)

• A) more materials were purchased than were used.
• B) more materials were used than were purchased.
• C) the actual cost of materials was less than the standard cost.
• D) the actual usage of materials was less than the standard alloweD.
• See calculation below.

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Definitions:

Domestic Firm

A company that operates primarily within the borders of its home country and is subject to its home country's jurisdiction and regulations.

Ownership Interest

Indicates an individual's or entity's legal rights and stakes in a company or property.

Consolidated Stockholders' Equity

The total equity in a conglomerate of all the shareholders combined, as if the conglomerate and its subsidiaries were a single entity.

Investment Income

Income received from investment assets, including dividends, interest, and capital gains.