Larned Company manufactures storage boxes using metal and employs a standard costing system. Variable overhead is allocated based on direct material usage (pounds), with overhead costs allocated to units based on an expected production of 13,500 units. The company keeps a materials inventory, meaning that the amount of material used may differ from the amount purchased in a given month.### Standard Cost Sheet for a Single Box:- **Direct Material**: 0.5 pound @ $8 = $4.00- **Direct Labor**: 0.2 hours @ $30 = $6.00- **Variable Overhead**: 0.5 pound @ $4 = $2.00- **Fixed Overhead**: $3.00**Total Standard Cost**: $15.00March's financial results reveal an average metal purchase price of $8.20 per pound. The purchase price variance was $1,540. The variable overhead efficiency variance was $1,200 favorable. The total good output produced was 12,000 units.### Requirements:**a.** Determine the pounds of metal purchased in March.**b.** Calculate the direct materials efficiency variance for March, indicating the effect as "F" for favorable or "U" for unfavorable.**c.** Calculate the pounds of metal used in March.| a. Metals purchased | | pounds ||-------------------------|---------|----------|| b. Efficiency variance | | "F" or "U" || c. Metals used | | pounds |

Name: Larned Company manufactures storage boxes using metal and employs a s
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Description: Larned Company manufactures storage boxes using metal and employs a standard costing system. Variable overhead is allocated based on direct material usage (pounds), with overhead costs allocated to units based on an expected production of 13,500 uni

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Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds). Overhead is allocated to units based on expected production of 13,500 units. Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a single box follows: 0.5 pound @ $8 0.2 hours @ $30 0.5 pound@ $4 Direct material Direct labor Variable overhead Fixed overhead $ 4.00 6.00 2.00 3.00 $15.00 March financial results show that the average purchase price of metal was $8.20 per pound. The purchase price variance was $1,540. The variable overhead efficiency variance was $1,200 favorable. Good output produced totaled 12,000 units. Required: a. How many pounds of metal were purchased in March? b. What was the direct materials efficiency variance in March? Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. c. How many pounds of metal were used in March?

Larned Company makes a storage box using metal. The company uses a standard costing system. Variable overhead is allocated on the basis of direct material usage (pounds). Overhead is allocated to units based on expected production of 13,500 units. Larned maintains a materials inventory, so the amount of material used is not necessarily the same as the amount of material purchased in any one month. The standard cost sheet for a single box follows: 0.5 pound @ $8 0.2 hours @ $30 0.5 pound@ $4 Direct material Direct labor Variable overhead Fixed overhead $ 4.00 6.00 2.00 3.00 $15.00 March financial results show that the average purchase price of metal was $8.20 per pound. The purchase price variance was $1,540. The variable overhead efficiency variance was $1,200 favorable. Good output produced totaled 12,000 units. Required: a. How many pounds of metal were purchased in March? b. What was the direct materials efficiency variance in March? Note: Indicate the effect of this variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. c. How many pounds of metal were used in March?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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