Pardoe Inc. - Variable Costs
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Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of direct labor hours. The company uses a standard cost system and has established the following standards for one unit of product:
Standard Standard Price Standard
Quantity or Rate Cost
Direct materials
Direct labor
Variable manufacturing overhead
During March, the following activity was recorded by the company:
? The company produced XXX units during the month.
? A total of YYY pounds of material were purchased at a cost of $ZZZ.
? There was no beginning inventory of materials on hand to start the month; at the end of the month, XXX pounds of material remained in the warehouse.
? During March, YYY direct labor hours were worked at a rate of $ZZ per hour.
? Variable manufacturing overhead costs during March totaled $XXX.
a. The materials price variance for March is:
b. The materials quantity variance for March is:
c. The variable overhead spending variance for March is:
d. The variable overhead efficiency variance for March is:
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Solution Summary
This solution is comprised of a detailed explanation to calculate the materials price variance, the materials quantity variance, the variable overhead spending variance, and the variable overhead efficiency variance for March.
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Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of direct labor hours. The company uses a standard cost system and has established the following standards for one unit of product:
Standard Standard Price Standard
Quantity or Rate Cost
Direct materials ½ lb/unit @ $10/lb
Direct labor 2 hr/unit @ $3/hr
Variable manufacturing overhead 2 hr/unit @ $1.50/hr
During March, the following activity was recorded by the company:
? The company produced 12,500 units during the month.
? ...
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