# Question

For 2009, PMD Inc. had set the following standards for production of metal tables: 35 pounds of iron at a standard cost of $2.60 per pound. During June, the company produced 300 tables. The company bought 10,625 pounds of iron at a cost of $25,500.

Required:

(a) What was the actual price per pound of the iron?

(b) What is the standard quantity of material allowed for June’s production?

(c) Assume that all the iron purchased was used during June. What are the material price, quantity, and total material variances for June?

(d) Assume instead that the company purchased 12,500 pounds of iron during June at the actual price per pound computed in part (a), but only used 10,625 in the production of the 300 tables. What are the material price and quantity variances for June? Can a total material variance be computed? Explain.

(e) Who would normally be considered responsible for the material price variance? The material quantity variance? Would you assign responsibility differently if the material purchased in June were of lower-than-normal quality? Explain.

Required:

(a) What was the actual price per pound of the iron?

(b) What is the standard quantity of material allowed for June’s production?

(c) Assume that all the iron purchased was used during June. What are the material price, quantity, and total material variances for June?

(d) Assume instead that the company purchased 12,500 pounds of iron during June at the actual price per pound computed in part (a), but only used 10,625 in the production of the 300 tables. What are the material price and quantity variances for June? Can a total material variance be computed? Explain.

(e) Who would normally be considered responsible for the material price variance? The material quantity variance? Would you assign responsibility differently if the material purchased in June were of lower-than-normal quality? Explain.

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