Pardoe Inc

question 47

Multiple Choice

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: During March, the following activity was recorded by the company: • The company produced 3,000 units during the month.
• A total of 8,000 pounds of material were purchased at a cost of $23,000.
• 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.
• During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour.
• Variable manufacturing overhead costs during March totaled $1,800.
The direct materials purchases variance is computed when the materials are purchased.
The labor efficiency variance for March is:

• A)$5,040 U
• B)$1,200 U
• C)$1,200 F
• D)$5,040 F

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Definitions:

Periodic Repayments

Regular payments made over time to settle a debt or loan, often consisting of both principal and interest components.

Profits

The financial gain obtained when the revenue from business activities exceeds the expenses, taxes, and costs of operation.

Insolvent

A financial state in which an individual or entity cannot meet its debt obligations as they come due, or its liabilities exceed its assets.

Debt Payment

The act of paying back the principal and interest on borrowed money, typically according to a predetermined schedule.