Pardoe, Inc., manufactures a single product. The company uses a standard cost system and has established...

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Accounting

Pardoe, Inc., manufactures a single product. The company uses astandard cost system and has established the following standardsfor one unit of product:
Standard
Quantity of inputs
Standard Price
or Rate per input
Standard
Cost per unit
Direct materials
1.5 pounds
$3.20 per pound
$4.80
Direct labor
0.7 hours
$5.00 per hour
$3.50

Pardoe's budget for March used estimated production and sales of2,900 units.
During March, the following activity was recorded by thecompany:
The company produced 3,000 units during the month.
A total of 5,000 pounds of material were purchased and used. Thecost was $18,000.
During March, 2000 direct labor hours were worked at a rate of$5.50 per hour.
For all of these Pardoe questions, pick the closest answernumerically and then choose based on the U or F.
The materials price variance for March is:
a.
$750 F
b.
$2,000 U
c.
$1,000 U
d.
$1,000 F
e.
$750 U
f.
$2,000 F

Answer & Explanation Solved by verified expert

4.5 Ratings (769 Votes)

b. $2,000 U
	Standard			Actual
Particulars	Pound	Rate	amount	Pound	Rate	amount
Materials	4,500.00	3.20	14,400.00	5,000.00	3.60	18,000.00

Actual output	3,000.00
Materials reqd (3000*1.5)	4,500.00

Direct material price variance = (SP-AP)*AQ purchased
Direct material price variance = (3.20 - 3.60)5000
Direct material price variance = (-.40)5000
Direct material price variance = 2,000 U

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Transcribed Image Text

Pardoe, Inc., manufactures a single product. The company uses astandard cost system and has established the following standardsfor one unit of product:StandardQuantity of inputsStandard Priceor Rate per inputStandardCost per unitDirect materials1.5 pounds$3.20 per pound$4.80Direct labor0.7 hours$5.00 per hour$3.50Pardoe's budget for March used estimated production and sales of2,900 units.During March, the following activity was recorded by thecompany:The company produced 3,000 units during the month.A total of 5,000 pounds of material were purchased and used. Thecost was $18,000.During March, 2000 direct labor hours were worked at a rate of$5.50 per hour.For all of these Pardoe questions, pick the closest answernumerically and then choose based on the U or F.The materials price variance for March is:a.$750 Fb.$2,000 Uc.$1,000 Ud.$1,000 Fe.$750 Uf.$2,000 F

	Standard Quantity of inputs	Standard Price or Rate per input	Standard Cost per unit
	Standard Quantity of inputs	Standard Price or Rate per input	Standard Cost per unit
Direct materials	1.5 pounds	$3.20 per pound	$4.80
Direct labor	0.7 hours	$5.00 per hour	$3.50