Pardoe, Inc

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