Question

Pato Company produces leather sandals. The company employs a standard costing
system and has the following standards in order to produce one pair of sandals:

                    standard quantity              standard price
direct materials     2 leather strips              ?? per strip
direct labor         2.5 hours                     $12 per hour
variable overhead    2.5 hours                     ?? per hour

During May, Pato purchased leather strips at a total cost of $124,250 and had
direct labor totaling $171,100. During May, Pato used 13,600 leather strips in
the production of sandals. Pato had no beginning inventories of any type for
May. At May 31, Pato had 600 leather strips remaining in its direct materials
inventory.

Pato Company reported the following variances for May:

  Direct material price variance ..............  $7,100 favorable
  Direct labor rate variance ..................  $29,500 unfavorable
  Total direct labor variance .................  $8,900 favorable
  Variable overhead spending variance .........  $2,440 favorable
  Variable overhead efficiency variance .......  $34,560 favorable

Calculate Pato's direct material quantity variance for May. If the variance is
favorable, place a minus sign in front of your answer (i.e., -5000). If the
variance is unfavorable, simply enter your answer as a number (i.e., 5000).

Answer 1

	total leather strips purchased = 13,600+600
				14200
	material price variance
	(Actual price - standard price)*AQ purchased = 7,100F
	(124,250       - x*14200 )=7100
	14200x                             = (7100+124250)
	x                                        = (7100+124250)/14200
	x =		9.25
2)	Direct material Quantity variance
	(Actual qty used - standard qty allowed)*standard rate
	(13,600    - 6000*2)*9.25
	14800	U	answer
	total direct labor variance
	(Actual cost - standard cost)=8,900 F
	(171,100       - x*2.5*12)     = 8900
	x                                               = (171100+8900)/2.5*12
	x                                       =			6000	units produced