Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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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
Quantity
Standard Price or Standard
Rate
Cost
Direct materials
2.0 pounds
$6.25 per pound
$12.50
Direct labor
0.5 hours
$19 per hour
$9.5
Variable
manufacturing
0.5 hours
$4.50 per hour
$2.25
overhead
During March, the following activity was recorded by the company:
-The company produced 5,600 units during the month.
-A total of 14,700 pounds of material were purchased at a cost of $41,160.
-There was no beginning inventory of materials on hand to start the month; at the end of
the month, 2,940 pounds of material remained in the warehouse.
-During March, 3,000 direct labor hours were worked at a rate of $19.50 per hour.
-Variable manufacturing overhead costs during March totaled $6,950.
The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for March is:
a. $3,500 F
b. $22,960 F
c. $22,960 U
d. $3,500 U
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Transcribed Image Text: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 Quantity Standard Price or Standard Rate Cost Direct materials 2.0 pounds $6.25 per pound $12.50 Direct labor 0.5 hours $19 per hour $9.5 Variable manufacturing 0.5 hours $4.50 per hour $2.25 overhead During March, the following activity was recorded by the company: -The company produced 5,600 units during the month. -A total of 14,700 pounds of material were purchased at a cost of $41,160. -There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,940 pounds of material remained in the warehouse. -During March, 3,000 direct labor hours were worked at a rate of $19.50 per hour. -Variable manufacturing overhead costs during March totaled $6,950. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for March is: a. $3,500 F b. $22,960 F c. $22,960 U d. $3,500 U
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