Paw-Paw Products Paw-Paw Products Produces and Sells Flannel Covered Dogbeds

question 86

Multiple Choice

Paw-Paw Products Paw-Paw Products produces and sells flannel covered dogbeds. In the current year, Paw-Paw had expected to sell 8,000 beds but actually produced and sold 8,500 beds. The following information is available regarding the standard cost to produce a single dogbed:
In the current year, 44,000 yards of material were purchased and used at a cost of $1.60 per yard and 365,500 direct labor minutes were incurred at a cost of $.23 per minute.
Refer to the Paw-Paw Products information above. The company's direct material usage variance for the current year is:

• A) $3,750 U.
• B) $2,250 U.
• C) $6,000 U.
• D) $6,650 U.

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Definitions:

Journal Entry

A record in the books of accounts that documents a financial transaction with a date, accounts affected, and amounts to be debited or credited.

Fair Value

An estimate of the market price of an asset or liability based on current conditions and available market information.

Journal Entry

A record of a financial transaction in the accounting system, showing debits and credits.

Property

Assets owned by an individual or a business, encompassing both tangible (land, buildings) and intangible (patents, trademarks) items.