Melrose Corporation Makes a Product That Uses a Material with the Following

question 222

Multiple Choice

Melrose Corporation makes a product that uses a material with the following standards: The company budgeted for production of 5,800 units in September, but actual production was 5,900 units. The company used 50,210 pounds of direct material to produce this output. The company purchased 55,100 pounds of the direct material at $5.80 per pound. The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for September is:

• A)$3,770 F
• B)$3,900 U
• C)$3,770 U
• D)$3,900 F

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Definitions:

Total Cost Function

The total cost function is a mathematical representation that shows how total costs of production vary with changes in output level.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Marginal Costs

The increase in cost due to the production of one further unit of a product or service.

Total Cost Function

An equation that shows the overall cost incurred by a firm in the production process, including both fixed and variable costs, as a function of the quantity of output produced.