Question

Medical Instruments produces a variety of electronic medical devices. Medical Instruments uses a standard cost system and computes price variances at the time of purchase. One product, a thermo-meter, measures patient temperatures orally. It requires a silver lead with a standard length of five inches per thermometer. To make the leads, hollow silver tubing is purchased at a standard price of $ 4 per inch, cut into the required length, and then assembled into the thermometer. There was no silver tubing in inventory when a batch of 200 thermometers was scheduled for production. Twelve hundred inches of silver tubing were purchased for $ 4,680 by the purchasing department for this 200- unit batch of thermometers, and 1,100 inches were used in production.

Required:
Compute the materials variances for silver tubing and comment on their meaning.



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  • CreatedDecember 15, 2014
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