Pardoe, Inc., manufactures a single product in which vartable manufacturing over
ID: 2519973 • Letter: P
Question
Pardoe, Inc., manufactures a single product in which vartable manufacturing overhead is assigned on th basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product Direct materials Direct labor Varlable manufacturing overhead 1.5 pounds 0.5 hours 0.5 hours Standard Price or Rate $3.75 per pound $9 per hour $2.00 per hour Standard Cost $5.625 $4.5 $1.00 During March, the following activity was recorded by the company . The company produced 3,600 units during the month. - A total of 8,900 pounds of material were purchased at a cost of $24,920. . There was no beginning inventory of materials on hand to start the month: at the end of the month, 1,780 pounds of matenial remained in the warehouse. - During March, 2,000 direct labor-hours were worked at a rate of $9.50 per hour. . Vanable manufacturing overhead costs during March totaled $2.200. The direct materials purchases variance is computed when the materials are purchased. The materials price vartance for March Is: O $8,455 U O $12.520F O $12,520 u O $8455 FExplanation / Answer
Solution: 8,455 F
Working:
Standard Price = 3.75
Actual Price = 24920 / 8900 = 2.80
Difference: 0.95
0.95 * 8900 = 8,455 F
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