Eliezrie Corporation Makes a Product with the Following Standard Costs

question 62

Multiple Choice

Eliezrie Corporation makes a product with the following standard costs:

In January the company's budgeted production was 7,400 units but the actual production was 7,500 units. The company used 45,580 kilos of the direct material and 2,030 direct labor-hours to produce this output. During the month, the company purchased 48,500 kilos of the direct material at a cost of $53,350. The actual direct labor cost was $18,473 and the actual variable overhead cost was $7,714.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

-The materials price variance for January is:

• A)$4,875 F
• B)$4,875 U
• C)$4,850 U
• D)$4,850 F

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Definitions:

Price Controls

Government interventions to regulate the maximum or minimum prices of certain commodities or services, aiming to prevent market imbalances.

Market Price

The existing rate at which an asset or service is available for buying or selling in a competitive environment.

Not Binding

A term used to describe agreements, conditions, or regulations that do not impose restrictions on the actions of the involved parties.

Market Effect

The impact of supply, demand, and external factors on the prices and availability of goods and services in a market.