The Collins Corporation Uses Standard Costing and Has Established the Following

question 30

Multiple Choice

The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes: • Direct materials: 4 gallons at $8 per gallon
• Direct labor: 1 hour at $16 per hour
During July, the company made 6,000 units of product and incurred the following costs:
• Direct materials purchased: 26,800 gallons at $8.20 per gallon
• Direct materials used: 25,200 gallons
• Direct labor used: 5,600 hours at $15.30 per hour
The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for July was:

• A)$22,960 Unfavorable
• B)$22,400 Unfavorable
• C)$9,600 Unfavorable
• D)$9,840 Unfavorable

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Definitions:

Public Good

A good or service offered to every member of a society for free, provided by either the government or a private entity or group, without seeking profit.

National Defense

Governmental and military measures designed to protect a country from external aggression and threats.

Free-Rider Problem

A situation where some individuals consume more than their fair share of a public resource, or shoulder less of the cost of its production, benefiting from it without paying for it.

Social Benefits

The total gains that accrue to society from an economic transaction or policy, encompassing both direct and indirect effects.