Griffen Company makes pipe using metal. The company uses a standard costing syst

Question

Griffen Company makes pipe using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds). Overhead is allocated to units based on expected production of 12,500 units. Griffen maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a unit of pipe follows: Direct material Direct labor Variable overhead Fixed overhead 11 pounds$14 $154.00 7 hours $30 210.00 11 poundsS7 77.00 25.00 $466.00 August financial results show that the average purchase price of metal was $14.50 per pound. The purchase price variance $34,701 unfavorable The variable overhead efficiency variance was 8,500 unfavorable. Good output produced totaled 15,500 units. Required a. How many pounds of metal were purchased in August? (Do not round intermediate calculations.) Metals purchased pounds

Explanation / Answer

Material price variance = (Standard price-actual price)actual quantity purchased

-34701 = (14-14.50)X

-0.50X = -34701

X(actual quantity purchased) = 69402

Material efficiency variance = (15500*11-171714)*14 = 16996 U

Variable efficiency variance = (Standard quantity-actual quantity)Standard rate

-8500 = (15500*11-X)7

-8500 =1193500-7X

7X = 1202000

X( metals used) = 171714 pounds

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