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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 | 6.50 | pounds | $ | 1.30 | per pound | $ | 8.45 | ||
Direct labor | 0.40 | hours | $ | 40.50 | per hour | $ | 16.20 | ||
Variable manufacturing overhead | 0.40 | hours | $ | 9.20 | per hour | $ | 3.68 | ||
During March, the following activity was recorded by the company:
- The company produced 3,100 units during the month.
- A total of 20,100 pounds of material were purchased at a cost of $14,280.
- There was no beginning inventory of materials on hand to start the month; at the end of the month, 4,320 pounds of material remained in the warehouse.
- During March, 1,160 direct labor-hours were worked at a rate of $37.50 per hour.
- Variable manufacturing overhead costs during March totaled $14,761.
The direct materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for March is:
Multiple Choice
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$4,089 F
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$4,465 U
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$4,465 F
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$4,089 U
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