Epley Corporation Makes a Product with the Following Standard Costs

question 226

Multiple Choice

Epley Corporation makes a product with the following standard costs: In July the company produced 3,300 units using 12,240 pounds of the direct material and 2,760 direct labor-hours. During the month, the company purchased 13,000 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $51,612 and the actual variable overhead cost was $20,148. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for July is:

• A)$3,465 U
• B)$3,900 F
• C)$3,465 F
• D)$3,900 U

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Definitions:

Utility Maximization

The principle that individuals or firms seek to allocate their resources in a manner that maximizes their satisfaction or utility.

Money Income

Money income is the total amount of money earnings received by an individual or household, including wages, salaries, benefits, and investment income, before any deductions.

Marginal Utility

The additional satisfaction or utility a consumer receives from consuming one additional unit of a good or service.

Consumer Equilibrium

occurs when a consumer has allocated their resources in such a way that maximizes their utility, given their budget constraint.