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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 | 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 materials quantity variance for March is:
Multiple Choice
-
$1,116 U
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$1,116 F
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$1,302 F
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$1,302 U
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