Question

Griffen Company makes pipe using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds). Overhead is allocated to units based on expected production of 12,300 units. Griffen maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month.

The standard cost sheet for a unit of pipe follows.

Direct material	9	pounds	@	$	8		$	72.00
Direct labor	5	hours	@	$	28			140.00
Variable overhead	9	pounds	@	$	5			45.00
Fixed overhead								23.00
							$	280.00

August financial results show that the average purchase price of metal was $8.30 per pound. The purchase price variance $34,695 unfavorable. The variable overhead efficiency variance was 8,300 unfavorable. Good output produced totaled 15,300 units.

Required:

a. How many pounds of metal were purchased in August? (Do not round intermediate calculations.)

b. What was the direct material efficiency variance in August? (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

c. How many pounds of metal were used in August? (Do not round intermediate calculations.)

Answer 1

In the given problem there is no details of inventory so the total amount purchased is used for production

For any clarifications please comment.