Question
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
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 1.5 pounds $3.75 per pound $5.625 Direct labor 0.5 hours $9 per hour $4.5 Variable manufacturing overhead 0.5 hours $2.00 per hour $1.00
During March, the following activity was recorded by the company: The company produced 3,600 units during the month. A total of 8,900 pounds of material were purchased at a cost of $24,920. There was no beginning inventory of materials on hand to start the month; at the end of the month,
1,780 pounds of material remained in the warehouse.
During March, 2,000 direct labor-hours were worked at a rate of $9.50 per hour. Variable manufacturing overhead costs during March totaled $2,200. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for March is:
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