Question
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
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 | 2.5 | pounds | $ | 5.00 | per pound | $ | 12.50 | ||
Direct labor | 0.6 | hours | $ | 14.00 | per hour | $ | 8.40 | ||
Variable manufacturing overhead | 0.6 | hours | $ | 3.25 | per hour | $ | 1.95 | ||
During March, the following activity was recorded by the company:
The company produced 4,600 units during the month.
A total of 15,000 pounds of material were purchased at a cost of $42,000.
There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,000 pounds of material remained in the warehouse.
During March, 2,960 direct labor-hours were worked at a rate of $14.50 per hour.
Variable manufacturing overhead costs during March totaled $5,972.
The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for March is:_____
Multiple Choice
$2,500 U
$2,500 F
$23,500 U
$23,500 F
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