Pardoe Inc

question 332

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 quantity variance for March is:

• A)$4,500 F
• B)$10,500 F
• C)$10,500 U
• D)$4,500 U

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Definitions:

Price Floor

A government-imposed minimum price below which a certain good cannot be sold.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity, often aimed at protecting consumers.

Shortage

A situation where the demand for a product or service exceeds the supply available at a given price.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand.