Question

Miller Company planned to produce 3,000 units of its single product, Tallium, during November. The standards for one unit of Tallium specify six pounds of materials at $0.30 per pound. Actual production in November was 3,100 units of Tallium. There was a favorable materials price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that:

a. more materials were purchased than were used.
b. more materials were used than were purchased.
c. the actual cost of materials was less than the standard cost.
d. the actual usage of materials was less than the standard allowed.

Answer 1

Option C is correct one.

The actual cost of materials was less than the standard cost.

Step-by-step explanation:

The organisation planned production of 3,000 units. For this, the standard material that is required is 6 pounds for each unit which costs $0.30 per pound. The real creation that occurred was 3,100 units. Additionally, the bookkeeper revealed great material price tag fluctuation of $380 and ominous quality change of $120. Along these lines the finishing up explanation on this difference is the genuine expense of materials was not exactly the standard expense.

In view of these changes, one could infer that the real expense of materials was not exactly the standard expense.