Cox Engineering Performs Cement Core Tests in Its Laboratory

question 73

Multiple Choice

Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of standard direct labor-hours. The following events occurred during March:

• 8,600 pounds of sand were purchased at a cost of $7,310.
• 7,200 pounds of sand were used for core tests.
• 840 actual direct labor-hours were worked at a cost of $8,610.
• Actual variable manufacturing overhead incurred was $3,200.
-The materials quantity variance for March is:

• A)$900 favorable
• B)$1,950 favorable
• C)$1,950 unfavorable
• D)$900 unfavorable

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Definitions:

Flexible Budget

A budget that is adaptable and varies according to the changes in activity level or volume.

Net Operating Income

The profit generated from a company's core business operations, excluding deductions of taxes and interest.

Facility Expenses

Costs associated with the physical locations a business operates, including utilities, maintenance, and rent or mortgage payments.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate financial planning.