Pardoe, Inc., manufactures a single product in which variable manufacturing over
ID: 2464151 • Letter: P
Question
Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is
assigned on the basis of direct labor hours. The company uses a standard cost system and has
established the following standards for one unit of product:
Standard Standard Price Standard
Quantity or Rate Cost
Direct materials ............................. 1.5 pounds $3.00 per pound $4.50
Direct labor .................................... 0.6 hours $6.00 per hour $3.60
Variable manufacturing overhead . 0.6 hours $1.25 per hour $0.75
During March, the following activity was recorded by the company:
• The company produced 3,000 units during the month.
• A total of 8,000 pounds of material were purchased at a cost of $23,000.
• There was no beginning inventory of materials on hand to start the month; at the end of
the month, 2,000 pounds of material remained in the warehouse.
• During March, 1600 direct labor hours were worked at a rate of $6.50 per hour.
• Variable manufacturing overhead costs during March totaled $1,800.
Explanation / Answer
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