The Collins Corporation Uses Standard Costing and Has Established the Following

question 77

Multiple Choice

The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes:

• Direct materials: 4 gallons at $8 per gallon
• Direct labor: 1 hour at $16 per hour

During July, the company made 6,000 units of product and incurred the following costs:

• Direct materials purchased: 26,800 gallons at $8.20 per gallon
• Direct materials used: 25,200 gallons
• Direct labor used: 5,600 hours at $15.30 per hour

The direct materials purchases variance is computed when the materials are purchased.

-The materials price variance for July was:

• A)$5,360 Favorable
• B)$5,360 Unfavorable
• C)$5,040 Favorable
• D)$5,040 Unfavorable

---

Definitions:

Perennial

Plants that live for more than two years, often going through cycles of growth, flowering, and dormancy.

Annual

A plant that completes its life cycle, from germination to the production of seeds, within one year, and then dies.

Naphthalene Acetic Acid

A synthetic compound resembling naturally occurring auxins, used to stimulate plant growth and rooting.

Auxin

A class of plant hormones that play a crucial role in coordinating various growth and behavioral processes in the plant's life cycle.