Johnston Manufacturing Company purchased 14,000 switches to make 6,000

Question

Quizplus · Accepted Answer

Since Johnston Manufacturing Company purchased 14,000 switches but only needed 6,000 switches, they have an excess of 8,000 switches. The cost of these excess switches is considered an unfavorable cost as they were not needed for production. To calculate this cost, we can multiply the excess quantity (8,000) by the cost per switch:

8,000 switches x $0.0875 per switch = $700 unfavorable

Therefore, the best choice is C) $700 unfavorable.

Johnston Manufacturing Company Purchased 14,000 Switches to Make 6,000