Jackson Industries Uses a Standard Cost System in Which Direct

question 35

Multiple Choice

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product. During May, Jackson purchased 125,000 pounds of direct material at a total cost of $475,000. The total factory wages for May were $364,000, 90 percent of which were for direct labor. Jackson manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor-hours. The materials quantity variance for May is:

• A)$7,200 Unfavorable
• B)$7,600 Favorable
• C)$5,850 Unfavorable
• D)$7,200 Favorable

---

Definitions:

Scrip Dividends

A form of dividend payment made by a company to its shareholders in the form of additional stock, instead of cash.

Property Dividends

Dividends paid to shareholders in the form of assets other than cash.

Stock Dividends

A dividend payment made to shareholders in the form of additional shares rather than cash payout, reflecting the company's desire to reinvest the dividend back into the business.

Accrual

The accounting principle of recording revenues and expenses when they are incurred, regardless of when cash transactions occur.