Pardoe Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. 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
Direct Materials	1.5 pounds	$3.00 per pound	$4.50
Direct Labor	0.6 hours	$6.00 per hour	$3.60
Variable manufacturing overhead	0.6 hours	$1.25 per hour	$0.75

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

1.) The Company produced 3,000 units during the month.

2.) A total of 8,000 pounds of material were purchased at a cost of $23,000.

3.) 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.

4.) During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour.

5.) Variable manufacturing overhead costs during March totaled $1,800.

The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for March is :

A. $1,000 U

B. $ 750 F

C. $1,000 F

D. $ 750 U

Answer rating: 100% (QA)

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