The Standards for Product F28 Call for 2

question 8

Essay

The standards for product F28 call for 2.7 pounds of a raw material that costs $16.50 per pound. Last month, 4,100 pounds of the raw material were purchased for $70,520. The actual output of the month was 1,300 units of product F28. A total of 3,500 pounds of the raw material were used to produce this output.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw materials are purchased on account.)

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Definitions:

Canadian Tax Law

The laws and regulations that define how taxes are calculated, collected, and enforced in Canada, covering income, corporate, sales taxes, and more.

Depreciation Method

An accounting technique used to allocate the cost of a tangible asset over its useful life.

Stand-Alone Principle

A method in capital budgeting where a project is evaluated based on its own profitability without considering the impact of other projects or financing methods.

Incremental Cash Flows

The additional cash inflows or outflows expected from taking on a new project or investment, essential for assessing its potential profitability.