Question

Shawn Inc. planned to produce 3,000 units of its single product, Megatron, during November. The standard specifications for one unit of Megatron include six pounds of material at $0.30 per pound. Actual production in November was 3,100 units of Megatron. The accountant computed a favorable materials purchase price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that: (CMA adapted)A. the actual cost of materials was less than the standard cost.B. more materials were purchased than were used.C. more materials were used than were purchased.D. the actual usage of materials was less than the standard allowed

Answer 1

Answer:The right answer is A

Step-by-step explanation:

Shawn Inc. planned to produce 3,000 units of its single product, Megatron, during November. The standard specifications for one unit of Megatron include six pounds of material at $0.30 per pound. Actual production in November was 3,100 units of Megatron. The accountant computed a favorable materials purchase price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that: (CMA adapted )

(a). the actual cost of materials was less than the standard cost.

(b). more materials were purchased than were used

.(c). more materials were used than were purchased.

(d). the actual usage of materials was less than the standard allowed

Based on these variances, one could conclude that "the actual cost of materials was less than the standard cost." because overall material cost variance will be favorable.

The right answer is A