Jackson Industries Uses a Standard Cost System in Which Direct

question 30

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 price variance for the direct material acquired by Jackson Industries during May is:

• A)$21,600 Favorable
• B)$25,000 Unfavorable
• C)$28,000 Favorable
• D)$21,600 Unfavorable

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Definitions:

Collection Pattern

The typical manner or time frame in which a business receives payments from its customers for goods or services sold.

Budgeted Sales

Budgeted Sales represent the anticipated sales revenue of a business, based on forecasted selling quantities and prices for a specific period.

Cash Collections

The process of gathering all payments or monetary amounts received from customers over a period.

Accounts Receivables

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.