Kibodeaux Corporation Makes a Product with the Following Standard Costs

question 120

Multiple Choice

Kibodeaux Corporation makes a product with the following standard costs: The company budgeted for production of 3,300 units in June, but actual production was 3,400 units. The company used 33,240 liters of direct material and 320 direct labor-hours to produce this output. The company purchased 35,900 liters of the direct material at $4.90 per liter. The actual direct labor rate was $22.70 per hour and the actual variable overhead rate was $2.70 per hour.

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 quantity variance for June is:

• A)$392 U
• B)$392 F
• C)$400 F
• D)$400 U

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, reflecting the potential benefits one misses out on when choosing one option over another.

Bowed Outward

Describes a curve on a graph, typically a production possibility frontier, indicating increasing opportunity costs when shifting resources between two goods.

Opportunity Cost

The cost of choosing one option over another, typically the best alternative forgone as a result of making a decision.

Efficient

Efficiency refers to the optimal production and distribution of resources in a way that best meets the needs and desires of consumers.