Pardoe Inc.,. manufactures a single product in which variable manufacturing over
ID: 2587496 • Letter: P
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 Standard Price Standard Cost 1.5 pounds $3.00 per pound$450 0.6 hours $6.00 per hour $3.60 $0.75 Quantity or Rate Direct materiels Direct labor Variable manufacturing overhead 0.6 hours $1.25 per hour 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 à cost of $23,000. re 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, 1,600 direct labor-hours were worked at a rate of $6.50 per hour. Variable manufacturing overhead costs during March totaled $1,800 materials purchases variance is computed when the materials are purchased The variable overhead efficiency variance for March is O $1,050 F O $1.050 U O s250 U O $250 FExplanation / Answer
Answer d. $250 (F) Variable Overhead Efficiency Variance = (SH - AH) X SR SH = 3,000 Units X 0.60 Hrs = 1,800 Hrs AH = 1,600 Hrs Variable Overhead Efficiency Variance = (1,800 hrs - 1,600 hrs) X $1.25 Variable Overhead Efficiency Variance = $250 (F)
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