A Company Uses the Following Standard Costs to Produce a Single

question 214

Multiple Choice

A company uses the following standard costs to produce a single unit of output. During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the total direct materials cost variance for the month was:

• A) $4,000 unfavorable
• B) $4,000 favorable
• C) $5,800 favorable
• D) $5,800 unfavorable
• E) $1,800 favorable

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Definitions:

Consumer Expectations

Consumer Expectations refer to the perceptions and predictions of future financial conditions or performances, which influence consumer behavior in the economy.

Net Wealth

Net wealth represents the total value of all financial and non-financial assets owned by an individual, corporation, country, or other entity, minus any liabilities.

Consumption Function

An economic formula that represents the relationship between total consumption and gross national income, indicating how spending is expected to increase with income.

Price Level

A measure of the average prices of goods and services in an economy at a specific time.