Answered: Newbill Corporation recently purchased…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Newbill Corporation recently purchased 25,000 gallons of direct material at OMR 5.60 per gallon. Usage by the end of the period amounted to 23,000 gallons. If the standard cost is OMR 6.00 per gallon and the company believes in computing variances at the earliest point possible, the direct-material price variance would be calculated as:

Select one:

a. 10,000 F

b. 9,200 UNF

c. 10,000 UNF

d. 9,200 F

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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