Pardoe Inc

question 421

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 materials price variance for March is:

• A)$1,000 F
• B)$1,000 U
• C)$750 F
• D)$750 U

---

Definitions:

Budgeting

The process of creating a plan to spend your money, outlining projected income and expenses for a certain period.

Budgeted Income Statement

A financial projection that estimates a company's revenue and expenses over a specific future period, predicting net income or loss.

Budgeted Balance Sheet

A financial statement projecting the future financial position of a company, based on expected assets, liabilities, and equity.

Continuous Budget

A 12-month budget that rolls forward one month as the current month is completed.