Question

In: Accounting

Pardoe, Inc., manufactures a single product. The company uses a standard cost system and has established...

Pardoe, Inc., manufactures a single product. The company uses a standard cost system and has established the following standards for one unit of product:

Standard

Quantity of inputs

Standard Price

or Rate per input

Standard

Cost per unit
Direct materials

1.5 pounds

$3.20 per pound

$4.80
Direct labor

0.7 hours

$5.00 per hour

$3.50


Pardoe's budget for March used estimated production and sales of 2,900 units.

During March, the following activity was recorded by the company:

The company produced 3,000 units during the month.

A total of 5,000 pounds of material were purchased and used. The cost was $18,000.

During March, 2000 direct labor hours were worked at a rate of $5.50 per hour.

For all of these Pardoe questions, pick the closest answer numerically and then choose based on the U or F.

The materials price variance for March is:

a.

$750 F
b.

$2,000 U
c.

$1,000 U
d.

$1,000 F
e.

$750 U
f.

$2,000 F

Solutions

Expert Solution

b.
$2,000 U
Standard Actual
Particulars Pound Rate amount Pound Rate amount
Materials                4,500.00                             3.20             14,400.00                5,000.00                        3.60             18,000.00
Actual output                3,000.00
Materials reqd (3000*1.5)                4,500.00
Direct material price variance = (SP-AP)*AQ purchased
Direct material price variance = (3.20 - 3.60)5000
Direct material price variance = (-.40)5000
Direct material price variance = 2,000 U

ekkarill92 answered 9 months ago
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