A Company Using a Standard Costing System Uses an Actual

question 36

Multiple Choice

A company using a standard costing system uses an actual quantity of 1100 kg of material at an actual cost of $1.20 per kg. The standard quantity allowed was 1000 kg at a standard cost of $1.00 per kg. After the goods are completed and transferred from work in process inventory, what is the cost of direct material that would appear in finished goods inventory?

• A) $1000
• B) $1100
• C) $1200
• D) $1320

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Definitions:

Direct Labor

The cost of wages for employees who are directly involved in producing a product or delivering a service.

Raw Material

The basic material from which a product is made, typically unprocessed or minimally processed substances used in manufacturing.

Direct Labor

Refers to the wages or salaries paid to workers directly involved in the production of goods or services.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain relatively constant regardless of the level of production, such as rent, insurance, and salaries of permanent staff.