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Homework answers / question archive / Which of the following is directly associated with a higher denominator level of activity? Multiple Choice Higher unit product cost
Which of the following is directly associated with a higher denominator level of activity? Multiple Choice Higher unit product cost. Lower unit product cost. Frequent occurrence of a volume variance. More profitable operations.
Cox Company's direct material costs for the month of January were as follows; $18,000 kilograms $3.60 per kilogram Actual quantity purchased Actual unit purchase price Materials price variance- Unfavourable (based on purchases) Standard quantity allowed For actual production Actual quantity used $3,600 16,000 kilograms 15,000 kilograms What was the favourable direct materials quantity variance for January? Multiple Choice O $3,360 $3,375 O $3,400. O
The following materials standards have been established for a particular product: Standard quantity per unit of output Standard price 1.7 metres $19.80 per metre The following data pertain to operations concerning the product for the last month: Actual materials purchased Actual cost of materials purchased Actual materials used in production Actual output 5,800 metres $113,680 5, 100 metres 3,200 units What was the materials quantity variance for the month? Multiple Choice $6,664 favourable. $6,732 favourable. -LI-
1) Denomitor activity level is the output(activity) level used to establish the predetermined fixed overhead application rate. Thus higher the denomitor activity level, lower will be the unit product cost.
a) Which of the following is directly associated with a higher denominator level of activity?
Ans : Lower unit product cost
2) Material Quantity Variance
Step 1 : Material Price Variance = (Actual price * Actual Qty purchased) - (Standard price * Actual Qty purchased)
3,600 = ($3.60 * 18000) - (Standard price * 18,000)
Standard Price = (64,800 - 3,600 ) / 18,000
Standard Price = $3.40
Step 2 : Material Quantity Variance = (Actual Qty used - Standard Quantity ) * Standard price
= ( 15,000 - 16,000 ) * $3.4
= 3,400 Favourable
3) Standard Qty for Actual Output = Actual Output * Std qty per unit of output
= 3,200 units * $1.7 meters
= 5,440 meters
Material Quantity Variance = (Actual Qty used - Standard Quantity ) * Standard price
= (5,100 meteres - 5,440 meteres) * $19.8
= $6,732 Favourable