### Soar, Inc. Direct Materials Standard Cost OverviewSoar, Inc. manufactures a product with the following direct materials standard cost: 1.60 pounds at $2.50 per pound.#### Budgeted and Actual Data for the Current MonthThe following table presents budgeted and actual information for the manufacturing of the finished product and the purchase and use of direct materials:- **Standard Cost for Direct Materials:** - 1.60 lb. @ $2.50 per lb. - **Budget vs. Actual:** - **Finished Goods (in units)** - Budget: 30,000 units - Actual: 32,000 units - **Direct Materials Usage (in pounds)** - Budget: Unknown - Actual: 51,000 pounds - **Direct Materials Purchases (in pounds)** - Budget: 48,000 pounds - Actual: 50,000 pounds - **Total Cost of Direct Materials Purchases** - Budget: Unknown - Actual: $120,000This data helps in assessing the efficiency and cost management related to direct materials usage and procurement during the production process. **Direct Materials Usage/Quantity Variance Analysis****Question:**Soar’s direct materials usage/quantity variance for the current month is:A. $500 favorable. B. $3,000 favorable. C. $5,000 favorable. D. $8,000 favorable.This question addresses the concept of direct materials variance, which is a metric used in cost accounting to assess the efficiency and cost-effectiveness of resource utilization. A favorable variance indicates that less material was used than expected, yielding cost savings. There are no graphs or diagrams associated with this text.

Materials Price Variance = (Standard price - Actual price) x Actual quantity = [2.50 -…

Soar, Inc. manufactures a product that has the direct materials standard cost presented below. Budgeted and actual information for the current month for the manufacture of the finished product and the purchase and use of the direct materials is also presented. Standard cost for direct materials: 1.60 lb. @ $2.50 per lb. Budget Actual Finished goods (in units) Direct materials usage (in pounds) Direct materials purchases (in pounds) 30,000 32,000 ? 51,000 48,000 50,000 Total cost of direct materials purchases ? $120,000

Soar, Inc. manufactures a product that has the direct materials standard cost presented below. Budgeted and actual information for the current month for the manufacture of the finished product and the purchase and use of the direct materials is also presented. Standard cost for direct materials: 1.60 lb. @ $2.50 per lb. Budget Actual Finished goods (in units) Direct materials usage (in pounds) Direct materials purchases (in pounds) 30,000 32,000 ? 51,000 48,000 50,000 Total cost of direct materials purchases ? $120,000

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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