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

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Definitions:

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 (impossible) and 1 (certain).

Variance

A statistical measure that represents the degree of spread or dispersion of a set of values from their mean.

Probability

The quantification of the probability that an event will happen, represented as a number ranging from 0 to 1.

Crashing

A project management technique used to reduce the time for project completion through the increase of resources on critical tasks.