Firecracker Company Has Developed the Following Standards for One of Its

question 108

Multiple Choice

Firecracker Company has developed the following standards for one of its products. Direct materials: 15 pounds × $16 per pound
Direct labor: 4 hours × $24 per hour
Variable manufacturing overhead: 4 hours × $14 per hour
The following activity occurred during the month of October:
Materials purchased: 10,000 pounds costing $170,000
Materials used: 7,200 pounds
Units produced: 500 units
Direct labor: 2,300 hours at $23.60/hour
Actual variable manufacturing overhead: $30,000
The company records materials price variances at the time of purchase.
The direct materials price variance is

• A) $50,000 favorable.
• B) $50,000 unfavorable.
• C) $10,000 favorable.
• D) $10,000 unfavorable.

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Definitions:

Dividends Payable

A liability on the company's balance sheet that indicates the amount of dividends declared by the board of directors but not yet paid to shareholders.

Additional Paid-in Capital

The amount of money investors pay above the par value of shares, reflecting the excess amount invested by shareholders in the company.

Common Stock

A type of equity security that represents ownership in a corporation, including voting rights and a share of profits through dividends.

Account Payable

An obligation or liability of a company to pay a debt owed to a creditor or supplier for goods and services received.