3. Epley Corporation makes a product with the following standard costs:

	Standard Quantity or Hours	Standard Price or Rate
Direct materials	4.5 pounds	$4.0 per pound
Direct labor	0.8 hours	$21.00 per hour
Variable overhead	0.8 hours	$9.50 per hour

In July the company produced 3,320 units using 13,280 pounds of the direct material and 2,776 direct labor-hours. During the month, the company purchased 14,040 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $57,895 and the actual variable overhead cost was $25,260.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The labor rate variance for July is:

a. $401 F

b. $401 U

c. $2,119 U

d. $2,119 F

4. 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 Rate	Standard Cost
Direct materials	2.5 pounds	$5.75 per pound	$14.375
Direct labor	0.5 hours	$17 per hour	$8.5
Variable manufacturing overhead	0.5 hours	$4.00 per hour	$2.00

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

The company produced 5,200 units during the month.

A total of 16,500 pounds of material were purchased at a cost of $46,200.

There was no beginning inventory of materials on hand to start the month; at the end of the month,

3,300 pounds of material remained in the warehouse.

During March, 2,800 direct labor-hours were worked at a rate of $17.50 per hour.

Variable manufacturing overhead costs during March totaled $5,800.

The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for March is:

a. $48,675 U

b. $26,200 F

c. $26,200 U

d. $48,675 F