Use the following to answer questions 60-65: Pardoe, Inc., manufactures a single

Question

Use the following to answer questions 60-65:

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:

%u2022 The company produced 3,000 units during the month.
%u2022 A total of 8,000 pounds of material were purchased at a cost of $23,000.
%u2022 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.
%u2022 During March, 1600 direct labor hours were worked at a rate of $6.50 per hour.
%u2022 Variable manufacturing overhead costs during March totaled $1,800.

60. The materials price variance for March is:
A) $1,000 F
B) $1,000 U
C) $750 F
D) $750 U

61. The materials quantity variance for March is:
A) $4,500 F
B) $10,500 F
C) $10,500 U
D) $4,500 U

62. The labor rate variance for March is:
A) $480 U
B) $800 U
C) $480 F
D) $800 F

63. The labor efficiency variance for March is:
A) $5,040 U
B) $1,200 U
C) $1,200 F
D) $5,040 F

64. The variable overhead spending variance for March is:
A) $200 U
B) $600 U
C) $600 F
D) $200 F

65. The variable overhead efficiency variance for March is:
A) $1,050 F
B) $1,050 U
C) $250 F
D) $250 U

Explanation / Answer

60. The materials price variance for March is:=3*8000- 23000 = 1000 F
A) $1,000 F

61. The materials quantity variance for March is:=(SQ-AQ)*SR =(1.5*3000 - 6000)*3=4500 U
D) $4,500 U

62. The labor rate variance for March is:= (6-6.5)*1600 = $800 U

B) $800 U


63. The labor efficiency variance for March is:=(0.6*3000-1600)*6 = $1200 F
C) $1,200 F


64. The variable overhead spending variance for March is:=1.25*1600- 1800 = $200 F
D) $200 F

65. The variable overhead efficiency variance for March is: (0.6*3000-1600)*1.25 = $250 F
C) $250 F

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