Pickrel Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes.

	Fixed Element per Month	Variable Element per Well Serviced
Revenue		$ 5,500
Employee salaries and wages	$ 53,700	$ 1,300
Servicing materials		$ 600
Other expenses	$ 34,400

When the company prepared its planning budget at the beginning of November, it assumed that 27 wells would have been serviced. However, 31 wells were actually serviced during November.

The amount shown for Servicing materials in the planning budget for November would have been closest to:

Multiple Choice

• $19,000

• $16,548

• $18,600

• $16,200

Puvo, Incorporated, 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	5.8	pounds	$ 0.60	per pound	$ 3.48
Direct labor	0.5	hours	$ 33.50	per hour	$ 16.75
Variable manufacturing overhead	0.5	hours	$ 8.50	per hour	$ 4.25

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

• The company produced 2,400 units during the month.
• A total of 19,400 pounds of material were purchased at a cost of $13,580.
• There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,620 pounds of material remained in the warehouse.
• During March, 1,090 direct labor-hours were worked at a rate of $30.50 per hour.
• Variable manufacturing overhead costs during March totaled $14,061.

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

The labor rate variance for March is:

Multiple Choice

• $4,120 F

• $3,270 U

• $4,120 U

• $3,270 F

Majer Corporation makes a product with the following standard costs:

	Standard Quantity or Hours		Standard Price or Rate		Standard Cost Per Unit
Direct materials	6.5	ounces	$ 3.00	per ounce	$ 19.50
Direct labor	0.5	hours	$ 10.00	per hour	$ 5.00
Variable overhead	0.5	hours	$ 3.00	per hour	$ 1.50

The company reported the following results concerning this product in February.

Originally budgeted output	5,600	units
Actual output	5,200	units
Raw materials used in production	31,100	ounces
Actual direct labor-hours	2,010	hours
Purchases of raw materials	32,100	ounces
Actual price of raw materials	$ 122.90	per ounce
Actual direct labor rate	$ 132.40	per hour
Actual variable overhead rate	$ 5.10	per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The variable overhead efficiency variance for February is:

Multiple Choice

• $1,720 F

• $1,720 U

• $1,770 F

• $1,770 U