Question

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	Standard Price or Rate	Standard Cost per unit
Direct materials	1.5 pounds	$3.00 per pound	$4.50
Direct labor	0.6 hours	$6.00 per hour	$3.60

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

• The company produced 3,000 units during the month.
• A total of 8,000 pounds of material were purchased at a cost of $23,000.
• There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,000 pounds of material remained in the warehouse.
• During March, 1600 direct labor hours were worked at a rate of $6.50 per hour.

1. The materials price variance for March is:

	a.	$5,000 F
	b.	$1,000 F
	c.	$750 U
	d.	$1,000 U
	e.	$5,000 U
	f.	$750 F

  

2. The labor efficiency variance for March is:

a. $5,040 F

b. $3,120 U

c. $1,200 U

d. $3,120 F

e. $1,200 F

f. $5,040 U

3.  The labor rate variance for March is:

a. $4,640 F

b. $480 F

c. $800 U

d. $480 U

e. $4,640 U

f. $800 F

4. The materials quantity variance for March is:

	a.	$6,000 U
	b.	$4,500 U
	c.	$10,500 F
	d.	$6,000 F
	e.	$4,500 F
	f.	$10,500 U

Answer 1