1.Enrique Industries purchased and consumed 56,000 gallons of direct material that was used in the production of...
Question:
1.Enrique Industries purchased and consumed 56,000 gallons of direct material that was used in the production of 15,000 finished units of product. According to engineering specifications, each finished unit had a manufacturing standard of four gallons. If a review of Enrique's accounting records at the end of the period disclosed a material price variance of $5,600U and a material quantity variance of $2,800F, what is the actual price paid for a gallon of direct material?
2. Lamar Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier, resulting in a direct-material price variance of $10,700F. The alloy produced more waste than normal, as evidenced by a direct-material quantity variance of $3,500U, and was also difficult to use. This slowed worker efficiency, generating a $4,000U labor efficiency variance. To help remedy the situation, the production manager used senior line employees, which gave rise to a $1,300U labor rate variance. If overall product quality did not suffer, what variance amount is best used in judging the appropriateness of the purchasing manager's decision to acquire substandard material?