Pardoe, Inc., manufactures a single product in which variable manufacturing over

Question

Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Quantity Standard Price or Rate Standard Cost Direct materials 1.5 pounds $5.25 per pound $7.875 Direct labor 0.5 hours $15 per hour $7.5 Variable manufacturing overhead 0.5 hours $3.50 per hour $1.75 During March, the following activity was recorded by the company: • The company produced 4,800 units during the month. • A total of 10,700 pounds of material were purchased at a cost of $29,960. • There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,140 pounds of material remained in the warehouse. • During March, 2,600 direct labor-hours were worked at a rate of $15.50 per hour. • Variable manufacturing overhead costs during March totaled $4,750. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for March is: $7,140 U $7,140 F $15,760 F $15,760 U

Explanation / Answer

Pardoe Inc. All Amounts in $ Standard quantity of material required for 4,800 units = 4,800 X 1.50 = 7,200 pounds A Actual quantity of material used in production = 10,700 pounds - 2,140 pounds closing inventory = 8,560 pounds B Standard Rate per pound = $ 5.25 C Hence, the materials quantity variance = (A-B) X C = -7140 U

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.