ch8 4) A company has established 5 pounds of Material J at $2 per pound as the s
ID: 2473383 • Letter: C
Question
ch8
4)
A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880.The direct materials price variance is:
$520 unfavorable.
$400 unfavorable.
$120 favorable.
$520 favorable.
$400 favorable.
5)
Based on a predicted level of production and sales of 30,000 units, a company anticipates total contribution margin of $105,000, fixed costs of $40,000, and operating income of $52,000. Based on this information, the budgeted operating income for 28,000 units would be:
$52,000.
$135,333.
$58,000.
$72,500.
$105,000.
Explanation / Answer
Material Price Variance = ( Standard Cost- Actual Cost) Actual Quantity of Material (2-9880/5200)5200 .1*5200 520 Favourable The correct answer is D. 520 Favourable Budgeting Operating Income Units 30000 28000 Contribution 105000 98000 FC 40000 40000 Income 52000 58000 The correct answer is C. $ 58000
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