9

Puvo, 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:

	Standard Quantity			Standard Price or Rate			Standard Cost
Direct materials		6.80	pounds	$	0.60	per pound	$	4.08
Direct labor		0.50	hours	$	43.50	per hour	$	21.75
Variable manufacturing overhead		0.50	hours	$	9.50	per hour	$	4.75

During March, the following activity was recorded by the company:

• The company produced 3,400 units during the month.
• A total of 20,400 pounds of material were purchased at a cost of $14,580.
• There was no beginning inventory of materials on hand to start the month; at the end of the month, 4,620 pounds of material remained in the warehouse.
• During March, 1,190 direct labor-hours were worked at a rate of $40.50 per hour.
• Variable manufacturing overhead costs during March totaled $15,061.

The direct materials purchases variance is computed when the materials are purchased.

The variable overhead rate variance for March is:

Multiple Choice

• $3,756 F

• $4,310 U

• $4,310 F

• $3,756 U