Pato Company produces leather sandals. The company employs a standard costing sy
ID: 2510195 • Letter: P
Question
Pato Company produces leather sandals. The company employs a standard costing system and has the following standards in order to produce one pair of sandals: standard quantity standard price direct materials 2 leather strips ?? per strip direct labor 2.5 hours $12 per hour variable overhead 2.5 hours ?? per hour During May, Pato purchased leather strips at a total cost of $124,250 and had direct labor totaling $171,100. During May, Pato used 13,600 leather strips in the production of sandals. Pato had no beginning inventories of any type for May. At May 31, Pato had 600 leather strips remaining in its direct materials inventory. Pato Company reported the following variances for May: Direct material price variance .............. $7,100 favorable Direct labor rate variance .................. $29,500 unfavorable Total direct labor variance ................. $8,900 favorable Variable overhead spending variance ......... $2,440 favorable Variable overhead efficiency variance ....... $34,560 favorable Calculate Pato's direct material quantity variance for May. If the variance is favorable, place a minus sign in front of your answer (i.e., -5000). If the variance is unfavorable, simply enter your answer as a number (i.e., 5000).
Explanation / Answer
total leather strips purchased = 13,600+600 14200 material price variance (Actual price - standard price)*AQ purchased = 7,100F (124,250 - x*14200 )=7100 14200x = (7100+124250) x = (7100+124250)/14200 x = 9.25 2) Direct material Quantity variance (Actual qty used - standard qty allowed)*standard rate (13,600 - 6000*2)*9.25 14800 U answer total direct labor variance (Actual cost - standard cost)=8,900 F (171,100 - x*2.5*12) = 8900 x = (171100+8900)/2.5*12 x = 6000 units produced