The Fantasy Gifts Company, a maker of Holiday novelties, needs your help immediately. The company's accountant resigned without leaving adequate records or explanations for what they did. In reviewing the records, you find the following information for May:Materials PurchasedMaterials Used38,000 units24,000 unitsYou find a copy of the budget which shows that materials were budgeted at $0.60 per unit. You know that the materials price variance is recorded at the time of purchase and you find some handwritten notes among the accountants work papers. which indicate the following:Materials price varianceMaterials efficiency variance$ 380 F$ 1,500 FWhat was the total standard cost of direct materials purchased during May?Multiple Cholce$22.420$22,800$14.628$23,180 The Fantasy Gifts Company, a maker of Holiday novelties, needs your help immediately. The company's accountant resigned without leaving adequate records or explanations for what they did. Inreviewing the records, you find the following information for May:Materials PurchasedMaterials UsedYou find a copy of the budget which shows that materials were budgeted at $0.60 per unit. You know that the materials price variance is recorded at the time of purchase and you find some handwrittennotes among the accountant's work papers, which indicate the following:Materials price variance$380 F$1,500 FMaterials efficiency varianceWhat was the total standard cost of direct materials purchased during May?Multiple Choice$22,420$22,80038,000 units24,000 units$14,628$23.180

Standard cost means budgeted cost of materials. Standard figures are compared with actuals for the purpose of variance calculation and decision making. Here,Materials purchased = 38000 unitsStandard cost per materials unit = $0.6 per unitStandard cost of materials purchased = Materials purchased * Standard cost per unit= 38000 * $0.6 = $22800Standard cost of materials purchased = $22800

Answered: The Fantasy Gifts Company, a maker of…

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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The Fantasy Gifts Company, a maker of Holiday novelties, needs your help immediately. The company's accountant resigned without leaving adequate records or explanations for what they did. In reviewing the records, you find the following information for May: Materials Purchased Materials Used 38,000 units 24,000 units You find a copy of the budget which shows that materials were budgeted at $0.60 per unit. You know that the materials price variance is recorded at the time of purchase and you find some handwritten notes among the accountants work papers. which indicate the following: Materials price variance Materials efficiency variance $ 380 F $ 1,500 F What was the total standard cost of direct materials purchased during May? Multiple Cholce $22.420 $22,800 $14.628 $23,180

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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